Sri Lanka poised to default on its international debt

Skyrocketing inflation, political unrest and looming debt default. Another country’s economy is now failing in what’s likely to be a year or two of falling dominoes for at-risk economies.

A month of increasingly desperate headlines has culminated in two leading ratings agencies warning Sri Lanka is about to default on its national debt, a crisis that would take decades to resolve for the small nation off the south east coast of India.

S&P Global Ratings says that a default is now a “virtual certainty”. Fitch Ratings has lowered its assessment claiming “a sovereign default process has begun”.

For their part the government says that it will “temporarily default on its foreign debts as it faces its worst economic crisis in more than 70 years”.

In 2 days time, Sri Lanka is due to make US$78 million interest payments on its international sovereign bonds.

If the payment…