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Sri Lanka. The government announces a five-day “bank holiday” to restructure the national debt

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The Sri Lankan government has announced a five-day ‘bank holiday’. The break from work began on Thursday and is expected to end early next week. At that time, the restructuring of the domestic debt, which already amounts to USD 42 billion, is to be carried out.

“The government expects the whole process to be completed within these five days while the markets are closed,” the central bank governor said Sri Lanka Nandalal Weerasingh. He added that “depositors can be assured of the security of their accounts and their interests will not be compromised.”

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Protection against sudden movements

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According to both foreign and domestic analysts, the extra days off have been announced to provide an adequate buffer for any potential market reaction. “Apparently, the government has recognized the risk of a bank run (a situation where a large number of customers want to withdraw their deposits from a given financial institution at the same time, considering that it has solvency problems – ed.),” Alex Holmes, senior senior citizen, told the BBC in an interview with the BBC. economist at Oxford Economics.

Earlier, Sri Lankan President Ranil Wickremesinghe assured the public that the restructuring “will not lead to the collapse of the banking system”.

Colombo, the former capital of Sri LankaShutterstock

Huge crisis

Sri Lanka is facing its worst economic crisis since independence in more than seven decades. Sri Lanka secured $2.9 billion in aid from the International Monetary Fund (IMF) in March

The country is facing its worst economic crisis since independence from the British in 1948CHAMILA KARUNARATHNE/EPA/PAP

The country defaulted on debts to international lenders for the first time in its history in May last year. Shortages of medicines, fuel and other essentials have pushed the cost of living to record levels, sparking nationwide protests.

Main photo source: Shutterstock

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