Debt-Ridden Sri Lanka Halts Share Trading for 5 Days Amid Mounting Crisis

Sri Lankans protest outside the Sir Lankan president's office in Colombo, Sri Lanka, on April 11, 2022. (Eranga Jayawardena/AP Photo)

Sri Lanka’s Colombo Stock Exchange (CSE) was ordered to close the stock market for five days from April 18 after the government announced its decision to suspend the repayment of billions of dollars in foreign debt.

The Sri Lankan Securities and Exchange Commission (SEC) said in an April 16 statement that CSE’s board of directors has called for a temporary halt to trading, citing “the present situation in the country.”

“The SEC is of the view that it would be in the best interests of investors as well as other market participants if they are afforded an opportunity to have more clarity and understanding of the economic conditions presently prevalent,” the statement reads.

The SEC said it has also “evaluated the impact the present situation in the country could have on the stock market, in particular the ability to conduct an orderly and fair market for trading in securities.”

Sri Lanka is on the brink of bankruptcy, saddled with dwindling foreign reserves and $25 billion in foreign debt due for repayment over the next five years. Nearly $7 billion is due this year. The government said on April 12 that it was suspending foreign debt repayments.

According to the country’s Finance Ministry, the International Monetary Fund (IMF) has assessed Sri Lanka’s foreign debt as unsustainable, and staying current on foreign debt payments is no longer a realistic policy for the country.

“The government intends to pursue its discussions with the IMF as expeditiously as possible with a view to formulating and presenting to the country’s creditors a comprehensive plan for restoring Sri Lanka’s external public debt to a fully sustainable position,” the ministry stated.

Sri Lanka’s national airline said that it had issued four requests for proposals to lease up to 21 aircraft by 2025 to support its business expansion strategy.

Two requests for proposals address existing fleet types, while two parallel proposals address alternative aircraft types, Sri Lanka’s News First reported.

The airline said that 60 percent of the planned aircraft would be used for “fleet replacement,” while the remainder would be used to support its expansion strategy and “meet the growing demand for air travel between Sri Lanka and the world.”

Harsha de Silva, a member of parliament from the opposition Samagi Jana Balawegaya alliance, criticized the plan as “nonsense,” given the country’s ongoing financial crisis.

“Sri Lanka is bankrupt; no fuel, gas, or medicine. Where the hell is money for this nonsense?! Better immediately clarify,” he wrote on Twitter.

Sri Lanka is experiencing its worst economic crisis in decades, with its foreign exchange reserves plummeting by 70 percent in the past two years to about $2.31 billion, leaving it unable to pay for essential imports.

Sri Lankans have been forced to wait in long lines to buy cooking gas, fuel, and milk powder, and doctors have said there’s a catastrophic shortage of essential drugs in government hospitals.

Protesters have camped out daily outside the president’s office, demanding the resignation of President Gotabaya Rajapaksa, blaming his government for the economic crisis. Rajapaksa has refused to yield power, saying the governing coalition would continue to rule Sri Lanka because opposition parties rejected its call for a unity government.

The Associated Press contributed to this report.