The past few months have been scripting what Sri Lanka hasn't experienced in history. From the worst economic downfall, widespread agitation, and political crisis, to the foreign currency fallout, the island nation has several distressing events to offer to the world over the outcome of flawed governance with shaky economic policies. The events coming from Sri Lanka are vividly suggesting that the country is yet to reach the bottom line of the bad news.

Adding chapters to the tale of pain, Sri Lanka has gone into default for the first time in its history. The development has come after a 30-day grace period to come up with a $78 million unpaid debt interest payment has expired on Wednesday. According to reports, the Governor of the Sri Lankan central bank said that the country has now gone to a level of 'pre-emptive default'. 

On Thursday, two of the world's biggest credit rating agencies also said Sri Lanka had defaulted. Central Bank of Sri Lanka's Governor Nandalal Weerasinghe said, "Our position is very clear, we said that until they come to the restructure of our debts, we will not be able to pay. So, that's what you call pre-emptive default. There can be technical definitions, from their side they can consider it a default. Our position is very clear, until there is a debt restructure, we cannot repay." 

Default is a weakening economic state that occurs when the governments are unable to meet some or all of their debt payments to creditors. If a country goes bankrupt, it will damage its reputation with investors as they would refrain from investing in such a faltering economy. Default would also put the country face more hindrances in acquiring the money from the international markets and banks as the economic downfall would reduce the level of confidence that the country would repay the debts. 

The reports say that Sri Lanka is seeking to restructure debts of more than $50 billion it owes to foreign lenders to make it more manageable to pay. Sri Lanka has been suffering economically in the wake of the dearth of foreign currency to balance its international exports and imports and the people of the island nation have been witnessing an unprecedented scale of inflation in the essential products. The tax cuts, the pandemic effect, and growing inflation had brought lakhs of Sri Lankans to the streets and they are protesting against the ruling regime. 

Speaking about inflation, Weerasinghe has warned that Sri Lanka's already very high rate of inflation was likely to rise further. He said, "Inflation obviously is around 30%. It will go even (higher), and headline inflation will go around 40% in the next couple of months." On Thursday, rating agency Moody's Investors Service said Sri Lanka had defaulted on its international bonds for the first time." Another agency, Fitch Ratings lowered its assessment of Sri Lanka to a restricted default level after a grace period for payments had expired. 

When the latest economic blow hit hard on the new administration led by Prime Minister Ranil Wickremesinghe, the latter had alarmed a big warning that the country is running out of food. He had anguishedly said, 'We are going to die' and that Sri Lanka would face a food shortage. Taking to Twitter on Thursday, he wrote, "While there may not be time to obtain fertilizer for this Yala (May-August) season, steps are being taken to ensure adequate stocks for the Maha (September-March) season. I sincerely urge everyone to accept the gravity of the situation." 

In another tweet, he wrote, "While the ministry of Agriculture would take the lead, all MPs should unite to implement a programme to increase the cultivation of the necessary crops and address the impending food shortage with appropriate mechanisms." On the other hand, Sri Lanka's Energy Minister has earlier this week said that the country had run out of money to pay for fuel. Power and Energy Minister Kanchana Wijesekara told the Parliament that Sri Lanka has no dollars to pay for petrol shipments. 

The minister had further appealed to the people to stop queuing for the next two days. "There aren't enough dollars available to open letters of credit. We are working to find funds but petrol will not be available at least until the weekend. The very small reserve stock of petrol is being released for essential services like ambulances", the minister added. Prime Minister Ranil Wickremesinghe said on Wednesday the country has secured $160 million in bridge financing from the World Bank, but it was not clear if the funds could be used for fuel payments.