Cash starved Sri Lanka with its dwindling foreign exchange reserves, has said that it will not default as a deadline for a $500 million international sovereign bond repayment approaches by the middle of the month. This year, the island nation will be required to repay an amount of $6.9 billion.

“We have high debt from three countries — China, Japan and India. The total outstanding for this year would be $6.9 billion,” Basil Rajapaksa, finance minister and younger brother of Prime Minister Mahindra Rajapaksa and President Gotabaya Rajapaksa. The finance minister also claimed that Colombo would not default in its repayment of debts.

Amid the repayment schedule and ongoing foreign exchange crisis, Sri Lanka has announced a $1.2 billion economic relief package.

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In the next five years, Colombo will have to make a repayment of $26 billion.

Sri Lanka based news organization,the Island said that foreign revenues in the next couple of years are extremely unlikely to be sufficient to service external debt obligations, while supporting the essential foreign exchange requirements of the economy.

The Guardian said that Colombo owes China more than $5bn in debt and last year took an additional $1bn loan from Beijing to help with its acute financial crisis, which is being paid in installments.

Though the economic impact of the Covid 19 pandemic was particularly harsh on Sri Lanka which primarily depends on the tourism sector for employment, the crisis-like situation is also due to the mishandling of policies by the government.