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Paying with Austerity: The Debt Crisis and Restructuring in Sri Lanka

Working Paper, December 2023 |

C.P. Chandrasekhar, Jayati Ghosh, Debamanyu Das
In May 2022, Sri Lanka defaulted on its external debt service commitments. This was the first instance in two decades of an Asian-Pacific economy defaulting on its debt. PERI researchers C.P. Chandrasekhar, Jayati Ghosh, and Debamanyu Das examine both the medium- and short-term factors leading to this debt crisis. These include the IMF-dictated embrace of liberalization policies starting in the late 1970s and the collapse of foreign exchange resulting from the global COVID lockdown. Chandrasekhar, Ghosh, and Das explore policy alternatives that would be less regressive and ensure sustainable development for Sri Lanka.
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