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The idea of Sri Lanka paying foreign debt while people went hungry became untenable. (Source photos by AP and Reuters) 
Market Spotlight

Sri Lanka's international bondholders brace for a haircut

Debt-ridden country's recent history is a chronicle of a default foretold

MARWAAN MACAN-MARKAR, Asia regional correspondent | Sri Lanka

BANGKOK -- Debt-ridden Sri Lanka has stepped into uncharted waters. Negotiations begin this week in Washington between government officials and the International Monetary Fund for a relief program, against the backdrop of protests at home and the decision to stop paying its overseas debts.

It is the 17th time the Indian Ocean nation has sought a financial lifeline from the fund, the second-highest frequency in Asia, after Pakistan. The planned default, however, is a first, leaving holders of its hard currency-denominated bonds expecting a debt restructuring in which they will take a haircut on what they are owed.

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