IMF paper draws lessons from Sri Lanka’s debt restructuring
Country sought to negotiate simultaneously with array of creditors, while executing reform plan
International Monetary Fund economists draw lessons from Sri Lanka’s 2022 debt crisis and the complex restructuring process that followed in a new working paper.
Authors Peter Breuer, Sandesh Dhungana and Mike Li note that a “series of misfortunes and several policy missteps” exacerbated a deteriorating economic situation in the late 2010s. A major tax cut in 2019 and an overvalued exchange rate deprived the country of foreign exchange reserves and fiscal buffers, while Covid-19 and the 2019
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