April 14, 2022, marked a critical day for Sri Lanka's economy as two of the world's largest credit rating agencies issued warnings of a looming debt default.
Fitch Ratings and S&P Global Ratings both downgraded Sri Lanka's credit rating, with Fitch describing the situation as 'a sovereign default process has begun'.
The country is facing its worst economic crisis in over 70 years, with mass protests erupting over power cuts, soaring food and fuel prices, and a severe shortage of foreign currency.
As Sri Lanka struggles to make ends meet, officials have urged citizens working abroad to send money home to help alleviate the crisis.
On Monday, Sri Lanka is due to make $78 million in interest payments on its international sovereign bonds, but with a 30-day grace period, the country may be able to temporarily avoid defaulting on its foreign debt.
However, if the payment is missed, it would mark Sri Lanka's first default on its foreign debt since gaining independence from the UK in 1948.
Fitch's latest rating puts Sri Lanka at 'near default' and indicates that its 'payment capacity is irrevocably impaired.'
Meanwhile, S&P Global Ratings downgraded Sri Lanka 'to reflect the virtual certainty of a default on some affected obligations.'
