Sri Lanka’s Financial Crisis

ISBs are virtually impossible to restructure or reschedule without very damaging consequences to SL, unlike other loan financing from bilateral or multilateral sources or institutions.

The ISBs required regular ongoing payments by the government as they matured, and impossible to sustainably manage concurrently with the need to pay for essential imports for the people, being severely impacted by the major downturn in all sectors of SLs meagre economy directly caused by the two years of pandemic effects.

In 2020, 38% of the Budget was allocated to pandemic related expenditure to protect the people and country.

And the Ukraine war from February 2022 has decimated SLs resources further and sent the cost of imports even higher.

This crisis is very serious and very hard on SLs people, but it is not corruption at play – only dollars in and dollars out arithmetic.

But – and this is the overriding “but” above all factors. The financial situation of the country should not have been allowed to get to this extreme desperate situation without forward planning and targeted remedial solutions being taken well in time, whatever the circumstances and whatever the solutions that were available.