Sri Lanka has announced that their country would default on its external public debt as its foreign reserves are depleted. It is the first time in history Sri Lanka would default on its debts due to a combination of bad policy decisions and spillovers from the Russian invasion of Ukraine.

S&P Global Ratings and Fitch Ratings have said that Sri Lanka’s default is now a certainty and that “a sovereign default process has begun.” The country is due to pay its $78 million interest payments on its international sovereign bonds. If they do not pay within the 30-day grace period, it would mean they are defaulting for the first time since its independence from the UK in 1948. However, they already said they are not able to pay.

Sri Lanka announced their inability to pay last Tuesday and said it would “temporarily default” on its $35.5 billion foreign debt and its $7 billion payments due this year because of its fiscal and economic difficulties. Last March, Sri Lanka’s foreign reserves fell to $2 billion leading to significant import cuts, which then led to a shortage of fuel, as per a report by The Financial Times. Making things worse for them, its currency, the Sri Lankan rupee, has fallen 37% against the US dollar.

This has led the governor of the country’s central bank to ask for donations in sterling, US dollars, and euros to help import food, fuel, and medicine.

Sri Lanka is just one of the countries experiencing spillover effects of the war. Developing countries all around the world have been feeling the effects of the Russian invasion of Ukraine. Due to the rising fuel prices caused by the war, developing countries struggle with the increasing cost of fuel, which would then increase the prices of food.

After long months of power cuts, rising fuel prices, and food and medicine scarcity, the Sri Lankan people have had enough. They took to the streets to protest and urge their President, Gotabaya Rajapaksa, to immediately resign. He was accused of exacerbating their bad economy due to his administration’s various policy decisions.

Anger filled the streets of Sri Lanka, where people from all walks of life joined the protest, telling their President to go home and resign. If successful, the Sri Lankan people would usher in a new era for possible systematic change in their government.