Topic: Sri Lanka defaults on its $51 billion external debt (Read 577 times)

China puts this country into a big debt, and the Sri Lanka government bite the trap, and this is the result already. I don’t think they will rise again in a short period of time so people in Sri Lanka should bare this crisis for more years and look for a better alternative as much as possible to live their daily needs. The government of Sri Lanka should start thinking for a better economic strategy, keep the good supply of basic necessities and calm their people, have a good propaganda and slowly they can recover.

The country is in an economic crisis, people come out to protest. There is a shortage of medicines, food, energy resources in the country. I wonder what will happen to the government? What should the government do to fix the situation? How can this government work if it has made bad living conditions for people. Maybe someone can help this country...

Whether you agree with me or not that's true if you will check 2018 economic growth chart, where Sri Lanka earned over 4 billion usd from tourism sector which is near 6% in their GDB but it’s dropped below 1% after 2019 when covid started and lockdown. So, Sri Lanka earned a significant amount of money from their tourism industry it’s definitely a big contribution in their GDP.

disagree about tourism. say on antigua people are poor too and have been. it has 100k population and had 1m /y tourists. Where sri lanka has 22m with 2.3m/y . it solves nothing anyway

You know Sri Lanka literacy rate over 90% still now, so there are no fault with education system. Mainly a few reason for this situation as like they're trapped in excessive foreign debt, Many mega projects have been built but the government has not benefited from them so now it's not possible to repay the foreign loans. Then Sri Lanka mainly depend on their tourism sector which is affected by Covid19.

When dealing with corruptors, of course, this is like turning off the system of a country, where a few people will only think about themselves, resulting in a monopoly that ultimately makes people miserable. therefore we can look in the mirror of developed countries, where even though they have bigger debts, but with proper management, it will create prosperity for their people. Indeed, corruption will bring damage to a country, especially mentality

imo managing debt is not an easy matter, the power of the US and sri lanka is much different...

it is obvious that the US is able to manage debt into profit every year, that is their advantage but in contrast to sri lanka, their country has debt and also a high number of corruptors which makes the function of the debt bad. just see what will happen to sri lanka when they manage to get loan funds from the IMF and world bank, whether they will be able to manage the debt!!

Of course the sad thing is to see the financial condition of Sri Lanka, inflation is very high in the value of imports to increase while exports are very small so that the Sri Lanka economy is very dependent on debt, the first thing to do is increase local production, especially agriculture which currently has a strong position.

These are one of the reasons why I said banking and political system are scam. I wonder if people will be taking into a certain office to solve the previous problem but instead of them solving the problem what they do is add to it and later bring up a lame excuse whereas they are making the same mistakes over again. Meanwhile, the answer to the issues is an innovative concept but they won't open the door for it.

They can't import anything, because their forex reserves have gone dry. Citizens are queueing for gasoline and cooking gas, and supermarket shelves are also empty. And here in India, there are reports of refugees arriving in the Southern State of Tamil Nadu by boat from Sri Lanka (some 15% of the Sri Lankan population is Tamil, and they have cultural connections to Tamil Nadu). Here we feel just lucky, because almost all of our neighbors are going through economic crisis (Sri Lanka, Nepal, Pakistan.etc).

Yes, it's 100% true,

People can blame Covid 19 only, It's also true that Covid 19 has claimed the lives of millions of people and crippled the economies of the countries. Inflation has now become a daily occurrence in countries.
The prices of basic necessities have gone up so much that they are almost out of reach of the common man. Even stable countries like USA also have been facing the problem of inflation since covid. Most of them like china, India, and other below-average countries are recovered now cause they are less corrupted than Sri Lanka.

However, most of the time behind these problems lies the corruption and opacity of the government and its other officials. And that's what happened recently with Sri Lanka.

Unscrupulous government officials were present in Sri Lanka way before the pandemic just like any other country out there to be honest. Recent corrupt officials though were some of the worst among the worst which screwed the country in several ways.

Russian war with Ukraine just accelerated their economic collapse which some of the posters above pointed out.

That isn't as simple as you think. Their country is reeling from debts at the moment which implies that they don't really have time to focus on improving their education system.

The sad thing to see the current rare condition of Sri, from a lot of news on TV and Social Media shows very high unemployment, the first thing Sri Lanka must improve is to improve the education system so that the people can be productive and of course reduce imports that are very burdens on the country.

Policies taken by the banking system and the political system are the majority of the reason for these kind of huge debts, i am not personally not aware of the political situation in Sri Lanka but this was news headline all over the world and they are blaming the entire situation on the untimely pandemic, what they are trying to hide is the fact that they were already in trouble well before the pandemic and the pandemic might have fast tracked their position.

Countries that can't sustain a diversified income with a bit of savings or future debt can't sustain and vulnerable. Look at the USA, they are in big debt, and they do not have easy time paying that neither, each year they are growing that, why are they not worried or not defaulting? Because, they are spending that money to earn more in the future, the 500 billion debt you make today, could mean 50 billion a year in the future, the 2 trillion you spent could comeback as 300 billion a year.

So, basically it is a situation where Sri Lanka could have relied heavily on manufacture and still would bankrupt, or farming and still bankrupt, you need to invest into multiple different sources of income or you will do badly.

due to covid-19 many Asian countries are in debt, including my own country. But unfortunately under this crisis there are some unscrupulous government officials who take the opportunity to commit corruption, especially Sri Lanka, where most of the government apparatus are mostly people in the kingdom.
but at this time the tourism sector has started to receive tourists from abroad which might change the economy there for the next year

Yes, it's sad that this happened to some countries but let's be honest here. The whole system of the Central Bank, politics, and education is a scam and even since the Covid-19 breakout a lot of people have already known that our Central Bank have failed us and the result of their failure is what we see that reflect in the country like Sri Lanka and Lebanon.

Sri Lankan economy is dependent on tourism and the pandemic situation played a part of their increasing debt, but the majority of the current situation should be blamed upon the Rajapaksa family who is ruling the country for an extended period of time and their economic blunders took the country to this position and they have to take the full responsibility.

The only solution is that the creditors should give Sri Lanka ample to restructure the loan for them to repay the loan and only then they can overcome this situation even though it is a really difficult task.

Unfortunately, I did not find up-to-date data - tell me, where can I see the structure of budget-forming industries in Sri Lanka, in recent years before Covid-19? Tourism - I agree that an important direction, but I vacationed in Sri Lanka from the beginning of 2000 to about 2014, and watched how the tourism industry developed. I have the opinion that it is, of course, not in its infancy, but it is difficult to call it gigantic, such as in Turkey or Thailand.

Notice this thread just now. I watched the news about Sri Lanka a few days back on your native TV news. I realized the main reason for bankruptcy is corruption there. Government peoples fill their pocket by corruption behind so-called development in their country. That's the reason why a lot of development becomes worthless and default loans. If the government servants become corrupted then this is the result expected. I can't see any other valid reason bankruptcy of Sri Lanka at all. It will be hard for them to overcome this situation due to wrong decisions by the government.

There are many reasons behind the bankruptcy of Sri Lanka. All we know, Sri Lankan economy mostly depends on Tourism industry. Because of COVID-19, their Tourism industry is totally off. At this time, they loss huge amount. Another hand, the government of Sri Lanka take a lots of Developmental workWith foreign debt. At this moment they didn't give Debt settlement.

In this case the government (assuming it survive this) should either put up a good system for distribution OR just get the fuck out of the way and let NGOs come in and handle it. With most things in life, preferably the latter or else it'll be like Haiyan where donations both domestic and international just ended up rotting in warehouses.

i continue to follow developments regarding the news of Sri Lanka which is currently bankrupt and feel sad to see so many citizens suffering as a result of their government being very ignorant in managing the country of Sri Lanka.  The last good news i read is that the IMF and the world bank are ready to help Sri Lanka, i hope this is not another debt trap.

indians feed them when are in mood. it's not africa . 1600m can feed 20 more
https://www.hindustantimes.com/world-news/india-sends-11-000-mt-of-rice-to-sri-lanka-ahead-of-new-year-101649752359499.html

But how long people can send stuffs like that? Government has to make a deal with countries to bring a permanent solution to this.
Billionaires also will help only with certain agreement like based on investment or something which benefits them and China is already doing it and looting all their natural resources.

Nepotism was a cancer to the Srilanka.Because the ministry of the government was occupied by the PM brothers.Long term this was happening in the Srilanka.The youth wing of Srilanka had started the revolution against the government.But the thing is their is no change in the government.All the people involved in the revolution was arrested,it should be looked by world people.

They never learn though. Unless the Sri Lankan leader go to jail should the military launch a coup, he'll be able to flee. Most times these leaders already have back up plans on how to escape and live comfortably abroad. Take for example the Marcoses of the Philippines.

From some TV news that i saw in Sri Lanka experiencing many crises, from oil, electricity and so on, of course this is a serious problem from the Sri Lanka economy team and i hope that soon there will be help to save sri Lanka.

Countries that only rely on income from tourists are very vulnerable to bankruptcy...

I agree that the phenomenon that is happening in Sri Lanka is the result of "mismanagement" by their government. they can't afford to pay debts and interest on debt from china, the biggest income only comes from tourism and the sizeable corruption is a fatal mistake from the sri lanka government. It will take a long time for Sri Lanka's economy to recover.

If donations start, then we could start with sending money but we could also start sending stuff as well. Like food and other stuff. That would probably result with something decent and we would definitely end up with a proper rebuilding process. I am not saying that it will be perfect, but it would certainly be something at least. I said the same thing when Venezuela first got terrible, if the world wanted to, we could definitely help them.

There is enough money in the world to help each nation in terrible condition, the downside is that people with billions may end up with less billions, I am sorry but cry me a river, it wouldn't be a big deal at all.

It is sad to see that Sri Rare's economy is heavily dependent on debt and is now failing to pay its debts. The thing that must be improved is the production and expansion of natural resources to the maximum in order to make Sri Rare's economy better in the future.

It is the same story everywhere. Populist governments around the world are constantly splurging money on welfare schemes, which have no long term impact on the ground. Apart from some short term benefits, these schemes make people more and more unproductive and enslaved to the government handouts. The federal debt rises beyond a sustainable limit as a result of these actions, and in the long term it weakens the national currency and the local economy. In this case Sri Lanka spent tens of billions of USD on wasteful infra projects with zero returns, in addition to welfare schemes.

The countries that are suffering economically did not just happen just because of the pandemic, it played a part but the most important aspect is the constant bad decisions by the government for several years that have taken them to a situation where they want to depend upon other countries to restructure their loans, in the case of Sri Lanka, they have taken huge loans from China and if China decides they can restructure their loan. Inflation has caught up big time and we understand that Sri Lanka is struggling really bad at this moment.

A very large debt burden while the gross domestic product is very small has made Sri Rare trapped in debt, now Sri Rare must remove all subsidies including education and health which are desperately needed by the people, I believe a long-term economic recession will occur in Sri Lanka and other countries' obligations to help immediately.

As you said even if people get aid from donations still there is no supply of products which is badly needed right now starting from the fuel, electricity, milk, veggies,etc.So individuals can't import goods for themselves without the government help so they are in need of some leader who understand the situation and has the ability to control which will atleast save people from starving to death then they can slowly gain back what they lost due to improper government policies made by group of stupid belong to single family.

In hindsight my comment was kinda harsh but I'm still of the opinion that the people should be pissed off enough to replace their current politicians. As for the actual aid, maybe crypto can help with that? Send the aid directly to the people that need them rather than have it pass through the hands of the politicians.

Problem of course is that's just for sending money and there maybe not enough food in the markets to buy. There's no getting around to having to send food there. Maybe the same system that would be used to receive the crypto donations can be used to track the food packs sent so it'll be easier to account how much of it is getting to the people. Like they can scan the code on the pack with their phone when they receive it.

Maybe once their government remove the ban on fertilizers, those can then be sent there and maybe NGOs can conduct agricultural training to get their food production up.

During the pandemic, Sri Lanka experienced a major crisis with rising global fuel costs adding to Sri Lanka's woes. Sri Lanka earned nearly US$4 billion (approximately Rp. 57.2 trillion) from tourism in 2019. That's a 90% drop due to the pandemic and Sri Lanka's biggest revenue comes from tourism, but Covid-19 has crippled its biggest financial earner as international flights are suspended.

No, they are not paying anything. Theoretically, they are bankrupt because they have a large sum of debt that they need to pay but they don't have that much reserve left. Their loan is more than 70% of their reserve and you are talking about getting better in time. But how they will do that when they can only offer trade through their native currency which no one will accept. International trade is mostly done with USD which they do not have right now.

No companies will occupy and sell their natural resource to get back their loan. Sri Lanka can not pay their debt by itself but lender by organizations and countries will take it anyway. So the only losing side is Sri Lanka.

The impact of inflation made the economy of Sri rare difficulties and experienced serious problems, several years ago Sri Rare also experienced the same problem, the difficulty of paying debts, and I was sure when Sri Rare could not pay debts, they would sell assets such as ports, airports and so on.

Donations and charity seems to be their best hope. They need to get hold of some celebrities who would be willing to do like concerts for them at this level, that is just an example but at the end of the day we are talking about a situation where all around the world people would need to give them enough money to help them survive.

Do you know what is the scariest and worst part? I am so sick and tired of politicians that I have zero idea about their politicians, no idea who their president is, never even wondered about it, and yet I still worry that if we could raise 50+ million dollars for example, all of that would go to helping people out, I fear some of it could be pocketed by some shady politicians. If you can avoid that, they can get better.

If this news is true, then the culprit of all is corrupt officials and this always happens in countries mismanagement that has put Sri Lanka in a worse economic condition and now they are starting to approach the IMF for new debt, the question is whether their officials are able to fix this worse condition which is more troublesome for the poor

https://www.businesstimes.com.sg/government-economy/sri-lanka-to-seek-us3b-to-stave-off-crisis-says-finance-minister

Despite the widespread protests and violence, the government is refusing to resign. And that is understandable. If the opposition comes to power, then Mahinda Rajapaksa and his cronies will be going to jail. He is not going to resign on his own, and the only chance of a regime change arises only if parliamentarians from his own party refuse to support him. The possibility of something like that happening is very remote, but we are getting some hints. 3 of the MPs have come up with statements clarifying that they are withdrawing support to the government (3 MPs from the Sri Lanka Muslim Council: Faizal Cassim, Ishak Rahuman and M S Thowfeek). Previously the regime had support of 156 out of 225 MPs.

The government should be changed for this.Or else debt can’t be recovered.It may be extreme statement.But it need to be done.Because the new way of approach to the economic will be done by the new government.If the youth of Srilanka get into the parliament,they will do some good changes in the government scheme.The most important one of economic will be changed by the people schemes by government.

The blames for such a situation were upon the politicians, covid-19 and improper governance. The country is small by its area, but densely populated. Some has also mentioned China as a reason for its downfall. Maybe that too can have an impact, because China always tires to be friendly with Sri Lanka so to have an naval base in Sri Lanka as India is just few nautical miles away.

Whenever such situation happens with any country there used to be suggestions of using bitcoin as a way to get out of the problem. Here is there anything possible to be done with bitcoin to overcome the bankruptcy.

It is never a good idea to default on your loans because it would make it incredibly hard to get a loan again. However, sometimes you just need to do it to get better, when you have no other choices left like Sri Lanka.

First of all, it is a government, not like they are a company that can go bankrupt, they are there, they may not be able to pay right now, but that doesn't mean that you can't give them any loans in the future because they may get better after this situation. Secondly, we are talking about having some debt even after this, they are not reaching to zero, they are defaulting on some debt, but they still have some more debt left that they will pay, which will help them gain some credit again.

Economic death spiral.
It started with populism, wanting to cut taxes but they went beyond what the budget could afford, you can't tax cut and at the same time rise incentives for not doing anything, one of the few times the FMI was right, you can't improve the economy by cutting VAT and covering that from money printing, at least if those tax reductions would have gone to production, but no!

Then COVID happen right after a terrorist attack so tourism was destroyed, there was no income and they started printing more and more and somehow managed to get even more debt on the way and of course, the debt was in other currencies not in their own, a little Weimar of their own.

On top of that a few final nails in the coffin, one of the eco madness that, of course, destroyed production of food, making less food per ha and more expensive, that in a country that is beyond the 100th place when it comes to GDP per capita, resulting in the awesome magical trick of losing places beyond that when it comes to GDP PPP, purchasing power, a clear sign of personal finances going down the drain. And more the fact that they still have to finance money-losing projects or they would face far bigger financial losses and workplaces, the textile industry hiccups during covid which left a huge mark last year, this year skyrocketing cotton prices, and so on and on.

Bad decisions were made at the worst possible moment and short term there is no miracle cure, this is far worse than Greece.

they've banned fertilizers in 2019 or so. organic farming is an experimental thing that may went wrong in terms of money.

It's a pity ... I really like Sri Lanka, at least as a tourist country (although the last time I was there was in 2018 or 2019). Beautiful nature, site, people, cuisine...
Unfortunately, I did not follow the development of the situation in the country's economy. What was the reason for this "final"?
It is difficult to recognize Sri Lanka as the most successful country, of course, but somehow I did not observe noticeable problems, at least until 2018/2019. Can anyone name the reasons?

Lankan economy became debt ridden only after they took huge loans for so called infrastructure development from china. They were expecting big gains from projects, but those projects actually never completed.  Moreover the tourism sector also died off during covid. The Ceylon tea estates also suffered greatly due to non availability of fertilizers in recent times.. However during all this period the debts kept mounting, and now they are in a bad debt trap.

Some politicians made money and the country became bankrupt.. This is a classical case when too much greed killed the golden goose

wion report on sri lanka gas troubles https://www.youtube.com/watch?v=ic7cdDFZO6A
you're not among yourselves

This is only going to get worse for Sri Lankans. They are in need of food imports and after the government defaulted on loans, who would lend them money now? They'd quickly run out of money buying food and then what happens when that remaining money is gone too? They all gonna starve without aid.

I would say let the people rise up and depose their corrupt leaders and then help restructure after. Just blindly pumping it with aid would only result in the same experience as in Africa where no matter how much aid is sent, nothing really changes since the politicians that are the problem remain in power.

Oh, the irony of having this topic just below the one about Russia and China forging a new world order, not even mentioning the fact about the debt being paid in rupees.

Yeah, too bad it was one of the countries that didn't action Russia, and one of the the possible partners
https://www.tamilguardian.com/content/world-slaps-sanctions-russia-sri-lanka-looks-deepen-trade-moscow


Yeah, but they were buying sugar, not gas, they had no cars and they weren't Sri Lankans but Russians.

Sri Lanka being a small country with a population of around 24million can come out of its economic downfall. The country depends much on tourism, but it wasn't able to make a recovery even after the covid-19 restrictions were taken out. Another reason is the mismanagement, the politicians are corrupt and they never think about the people. It has got more countries to help, and the funds provided were all corrupt.

Without outside investment economical growth is not possible for a developing country. People could still live by producing food in the old ways by their luxury of life will be oblivion. Only strong leadership can save the country right now or their natural resource will also be gone for paying the country's humongous debt.



The whole world faces the consequence of covid 19 with an economical hard blow but the Srilankan govt takes it to the next level by taking some decisions that can be blamed as the next level of stupidity. Simply in one word kinship and family corruption eat the economy of that country.

Name the best countries that produces raw materials and exporters in world, it doesn't matter how many they make as long as the leaders of their country is a person of self interest only-those numbers won't still suffice. These folks are sold to their foreign investors and little they know their country lies beneath at their feet. I hope it won't happen in my own land, good thing there are some sane leaders in here and puts first the interest of the nation and it's people.

Yes, when leaders fall in corruption country become this way! Present monetary situation in Sri Lanka brought about by external and internal shocks. There's government corruption engaged with all these, no hesitate to say government is incompetent and corrupt. It's also uncommon that dollar to enter Sri Lanka on the grounds that there are no foreign investors because of their spoiled system of government.  

This is fault of their government because they didn't to much on their actions made and this is the result for their not bothering to do more economical studies about those past actions they made. Governments should look at Sri Lanka and think more than became greedy to take unnecessary action because this incident might happen to other corrupt countries if they continue to milk their country for their own personal gains.

Which is really sad. Each time I see news about it (mostly just WION though, I don't see my other recommendations mention it) it seems it's getting worse. I hope this become a cautionary tale for many nations to be more fiscally responsible. It was said Sri Lanka have a large trade deficit to begin with, losing all the tourism money coz of the coof and now having to import more food is just making it worse.

Though I'm sure there's government corruption involved in all these. For example, who else would take out a loan to build a port only to have it seized coz it turns out you can't pay for said port? Someone got rich.

international banks have warned Sri Lanka to be careful with their debts, because their economy is not strong enough ... moreover there are some ports in Sri Lanka which are now in Chinese hands for a long time ... and some time ago China is already preparing to lend money to Sri Lanka to overcome their economic crisis ... it looks like Sri Lanka will be the next country to be occupied by China

This is such a really bad situation for Sri Lanka. The country's top leaders must vacate their positions. They have failed their people. They have effectively proven their incapacity to steer the nation forward amidst overlapping crises.

The Rajapaksa family has to quit from public office. They have only dragged the country toward oblivion.

And I hope they could find more ways to strengthen their local economies instead of running for help to predator countries like China and India. "More credit lines to buy commodities from them" doesn't sound so good at all.

this conclusion made by wion . And that is really the last deed of their gov

it's like "example made" in Phantom Doctrine

You are obviously a Russian, (Alexey).. and wants to put the blame for everything on the sanctions that was imposed on your country. You should blame Putin for his war mongering and the repercussions of his decisions to invade the Ukraine. The default on the debt has nothing to do with the sanctions that Sri Lanka implemented against Russia. (Most countries do this because they do not support WAR and if there was an aggressor against Russia, then Sri Lanka would have supported Russia)

The main reason for their economic hardship is the lack of tourist income for over 2 years. This will continue for many years, because people are afraid to travel and those who are not vaccinated cannot travel to other countries. 

Sri Lanka is a country with a lot of debt and the current economic condition is very difficult, it is like a big country like China, USA or Europe to immediately provide emergency financial assistance to Sri Lanka, if it is not addressed immediately I'm afraid there will be riots and the sale of assets to the private sector is getting worse. massive.

While many imports increased sharply, causing a serious crisis for the domestic economy, the government issued a ban on fertilizer imports, resulting in an unprecedented decline in agricultural output, which led to even greater import demand. In addition, there are non-repayable debts related to loans from China to build infrastructure. It's the end of government mismanagement.

This is my first time to hear a country declared a bankruptcy, I don’t know the effect of this in the long run but it looks like a disaster if you’re living in Sri Lanka, this is worst than having a high inflation rate. Is this because of China’s debt trap? I’m afraid that my country will ended up like this because we are also drowning in foreign debt.

How really sad to see a country go to this situation and this really mean that corruption make this country fall. So this should be look deeply by other country because if their officials keep sucking the funds of the people this will happen to them also. Hope they can overcome with this crisis and elect those officials who have really heart for the people who suffer to much on this economic crisis currently they are facing.

I also read this sad news on the online news and feel very sad about what is going on in Sri Lanka. What makes me most angry is that many Sri Lanka ministers have fled abroad to secure the assets they have accumulated. I hope the crisis with Sri Lanka will end soon.

I'm sorry that some countries aren't coping well and can't pay their debt obligations. I wish that under current conditions okay countries got postponements and perhaps reduction, even, of their debt. It's unfair that Russia can spend money on the war and yet argue against being declared a country that's under default, and some countries are struggling with ensuring their citizens have the basics... And in such cases, the already vulnerable and financially unstable people suffer most. I hope Sri Lanka will get better and figure out a way toward economic prosperity.

I do not expect Sri Lanka to fail to pay its debts, this is what makes Sri Rare's economic condition chaotic, unemployment has increased significantly and many government companies are auctioned off to the private sector and even to other countries to pay debts, other countries deserve to learn from Sri Lanka so they don't experience the same thing .

I have heard that their PM didn't consult with his cabinet members before taking such decision. Because of his arrogance food production in sri lanka cut to half that year and they had to import a large quantity of food because of food shortages. That further suck their already fast falling reserve. Now they are asking other country to do trade with their native currency which i am sure many won't agree with.

I'm assuming they weren't self-sufficient with food to begin with and I bet they didn't even increased imports beforehand to enlarge their buffer stock. Clearly the problem when strong men politicians make rules based on their "preferences" without having it pass through studies first is that the project bombs.

that's  right after they've commited sanctions over russia. It was a nice move

Not really blaming the China, they just gave the opportunity to political leaders to fall and the leaders actually fell by taking loans and investing on useless things which has no hope of giving returns. Literally China is trying to take over countries in the modern way and legally so called influencing then leasing. Again the governments are trying to find the short term solution by taking more loan and pay back the default money but at one stage no one is going to give the loan if there is no hope of the government ability to pay it back.

One country after another is starting to feel the impact of debt loans from China, indeed China has often offered assistance to poor and developing countries such as Sri langka, The increase in commodity prices in the global market has caused prices of goods and services to rise and made Sri Langka suffer a severe economic crisis, especially Sri Lanka has always been highly dependent on imported commodities from other countries so far, I think Sri Lanka is not the only country that has to lose important assets because it is unable to pay its debts to China, many other countries also have an impact due to high debt, such as Zimbabwe, Nigeria, and Uganda.

I have read many reports to understand what is happening in Sri Lanka, but some tried to blame China, but I should have created a full failure of the government in the management of monetary policy since 2005.
Generally, the state is not significant and estimates indicate that they need about $ 7 billion to serve debt this year and the reserves account for about 2 billion dollars, a much better number from many countries such as Lebanon, Venezuela and Burkina Faso.

So I do not think the crisis in Sri Lanka will be as bad as Lebanon, especially if the government has manage it well, but again, it seems that the essence of the crisis is more external interventions or an increase in Chinese influence.

Everyone discusses if its a good thing or a bad thing, but the reality is that its a forced thing. I mean they had absolutely no other choice, which means that they just had to default, if there was an alternative to it then they would have done it, but they had none so their hand was forced to fold. This will result with either a good future or a bad future, but even if it results with a bad future, like never getting any debt ever again which cripples the economy, this doesn't mean that they didn't consider the risks, they did consider it most probably and they still defaulted because.. well you guessed it right, they had no other choice. Managing a nation is a tough job, sometimes politicians fail (most of the time) and this is just another example.

Rising interest rates are a huge problem for the developing countries. Even the developed countries are in danger imo. In this capitalist financial system, every country is connected. If enough of those smaller countries keep defaulting on their debt, soon the pain will be felt in the developed countries as well. This is only the beginning. It will get a lot worse than this.

I don't think it's right to blame China alone for Sri Lanka's debt. Sri Lanka's debt from China is 10% while Sri Lanka's debt from Japan is the same. In 2017, Sri Lanka leased the port of Hambantota to China after failing to repay its 8 billion dollar loan from China. China has long been using that seaport to collect money for debt payments. Right now the loans that Sri Lanka is referring to as the failure of their credit council are probably loans from the Asian Development Bank, Japan, and India. Not only that, but Sri Lanka also borrowed 250 million from another neighboring country, Bangladesh through the currency swap system. Without repaying the loan, they again asked for another 250 million in loan assistance from Bangladesh which the Bangladesh government refused to pay.

The shortsightedness and mismanagement of their government are to blame for Sri Lanka's plight. The Sri Lankan government is also believed to have been involved in horrific corruption as a result of the Prime Minister's appointment of his own family members to all important government posts.

Another country fell into the China's debt trap, yes I too saw some articles about Sri Lankans locals protesting against the current ruling party which is about asking them to step down from the power because literally people were ran out of food, fuel, electricity even people who have money can't buy things due to shortages.Still no sign of development from the government or accepted their loss and stepping down from power.

There's an explanatory video that I've watched that Sri Lanka was one of the victims of the debt trap made by China. If it's true that they've been relieved from that debt trap.

Then there go the other consequences that they have to face. This pandemic really has caused a lot of countries to fall down and can no longer sustain their economy on their own. This country should be one of the countries getting focused by those rich countries in giving aid and help not just through the pandemic but as well as the guidance of financial recovery.

On the side of their government, there's probably a need to have an amendment since you've said nepotism is popular there.

I think nepal is also on the verge of default.


Statistics for disposable income have a tendency to shrink considerably during eras of economic concern. As disposable income is lost, hospitability and tourism sectors are hit the hardest. Naturally places like sri lanka and nepal which rely heavily on tourism would be affected. COVID travel restrictions may also have played a role in declining visitors.

People have criticized me for thinking crypto can solve many problems faced by society. But I can't see a good opportunity for crypto to improve circumstances here. Nepal and sri lanka NFTs? They have beautiful natural wildlife which could be photographed to make NFT art. But if the issue is shrinking disposable income, then art investment would also be on the decline.

What does the world bank and the rich countries expect? Sri Lanka is not honestly in a corner around since they are already struggling with the Pandemic, have anyone seen the news where Sri Lankan Doctors are right now begging the world for supplies since the government is not able to bear with the burden of the pandemic along with the waves of the war as well. The prices are rising and the inflation is making it harder ofcourse.

The government needs to understand that every country has its own plus points for Sri Lanka would be right next to the ocean - they need to facilitate the tourism industry and at the same time the country has to make sure to produce enough food and crops. The government needs to change how they are working at the moment because they are just going downhill.

Though their families were running the nation I dont think the situation should have been this worst. Well we have living example of Queen Elizabeth United Kingdom, floursihing way amazing than before and prospering each year. They also have kingly family running the whole nation. They have properly sat up all the ministries and full control over every movement in the nation. Could not give more sweeter example than UK.

Srilankan's, actually got into trouble due to that very decision of banning the fertilizer. You can not risk your nation with the most basic stuff needed to survive -food! Thats what they did and fail into trap. Definitely tourism also gone from Srilanka now and worsening the whole situation further. $51 billion is lot of money for small country like Srilanka.

The amount of Sri Lankan debt from various foreign donor agencies and countries is around $12.55 billion.

• Asian Development Bank 13%
• Japan 10%

• China 10%

• World Bank 9%

• India 2%.

They recently borrowed $250 million from Bangladesh. China accounts for 30% of total foreign investment in China. Large projects such as the port of Hambantota, the port city of Colombo, and the Lakavijaya Thermal Power Plant have direct Chinese investments. China has invested $11 billion in about 50 projects in Sri Lanka.


Goadar port is actually located in Pakistan. I think you are talking about Hambantota port which was a joint project with China. The port has so far failed to make any profit as the dividend is much lower than the cost to the port of Hambantota. The Sri Lankan government failed to repay the loan for the construction of the port. As a result, in 2017, the Prime Minister of Sri Lanka gave lease of 99 years to China.[/list]

The government hoped that tourism revenue would replenish the country's treasury, but because of the virus, the flow of tourists ended and the country lost profits. During the years of the civil war on the territory of this country, the government tried to regulate the economy, but apparently payments on external debt became too much of a burden for the country. Of course, covid was a big blow!

The funny thing is that their Prime Minister is a big fan of organic food which is why he has forced the farmers of his country to produce organic food. His government stopped fertilizer import without considering alternative food sources or checking their plans, which halved crop production. As a result, the government has to spend a large portion of its foreign reserves on food, which has further weakened its economy. A total mismanagement from the government.

I wonder why OP didn't mention about Chinese debt. 10% of their entire debt is along with China. Sri Lanka has already lost control of Goadar Port to China owing to the debt and now they have declared bankruptcy. Read more here,

https://timesofindia.indiatimes.com/business/international-business/explained-how-sri-lanka-fell-into-debt-trap-defaulted-on-foreign-payments/articleshow/90805938.cms

It is definitely a prime example of government mismanagement. Also their main source of income was tourism which got hit by Covid very seriously. We are seeing the cumulative effect now.

Wow that's the epitome of government mismanagement. What stuff do Sri Lanka export en masse that need to be certified as organic anyway? Even if that is the incentive, then just keep the organic fertilizers for those and allow the farmers to use what fertilizer they want for the other crops.

It is a shame that the world is ruled by a rich elite class who consolidate power and play citizens against each other. It is incredibly easy for democracy to be undermined and looted for the benefit of the few - instead of them allowing many people to live comfortably, some hoard enough wealth to live a thousand lifetimes in extravagance. As you said, often instead of deserving it through hard work or intelligence, it is simply because you were born into a specific family. We put a lot of trust into politicians at the top and have to be on guard constantly, they only have to make a few tweaks in the right conditions before independent institutions which can take them down are gone. It's a sad state of affairs, hopefully Sri Lanka can rid themselves of the scourge of nepotism.

I don't know if going into default is actually too bad for some countries. It sounds like their assets were being handled badly anyway if investors or their banks couldn't write off the interest payments through covid and take a break from paying it until they were back to a fully operational economy (I think almost every country overleveraged themselves to cope with the pandemic though).

Most countries should be able to survive and run themselves well without taking on debt as they'll have economies to fall back on. Sri Lanka is quite good at producing and extracting raw materials afaik so they've likely still got that part of their economy they can keep running to help build themselves back.

First Lebanon now Srilanka declared themself bankruptcy. After the covid-19 break out some countries(especially those whose source of income was from tourism) face severe consequences. Another source of income was exporting quality tea which was also reduced significantly. Srilankan tea brand is infamous in the world. Besides that, some bad decisions from the govt like forbidding tp importation of fertilizer to produce organic foods create food shortages in the country. Mostly covid and govt is to blame for this current situation in Sri Lanka.

Note: Neputism is very common in srilanka and most of the important ministry is occupied by brother and relatives of current PM.