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Defaults on Debt, Sees Inflation Reaching 40%: Sri Lanka Latest

Protestors take part in an ongoing anti-government demonstration in Colombo on May 18.

Protestors take part in an ongoing anti-government demonstration in Colombo on May 18.

Photographer: Ishara S. Kodikara/AFP/Getty Images

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Sri Lanka fell into default for the first time in its history as the government struggles to halt an economic meltdown that has led to a political crisis and street protests against soaring costs of everything from food to fuel.

The country’s policy makers had flagged to creditors that the island nation wouldn’t be able to make payments within the grace period, and is therefore in pre-emptive default, central bank Governor Nandalal Weerasinghe said at a briefing Thursday.