South Asia Scan

Review of key social, political, economic and strategic changes in South Asia

Title:	Sovereign Default and Economic Crisis in Sri Lanka: Causes and Policy Lessons
Author/s:	Ganeshan Wignaraja
Abstract:	After facing a severe balance of payments crisis, Sri Lanka defaulted on its foreign debt in April 2022, sparking its worst economic downturn in over 70 years. This South Asia Scan explores Sri Lanka's economic crisis and sovereign debt default, uncovering causes such as economic mismanagement and policy missteps, while also highlighting early 2024 stabilisation led by the new government. The analysis examines key policy lessons, the benefits of IMF support, and the role of Indian aid in recovery while emphasising potential risks with upcoming presidential and parliamentary elections.
Date:	30 April 2024
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