Global economists urge halt to Sri Lanka debt payments
The appeal comes as disaster recovery costs rise sharply, placing additional strain on public finances already under pressure from high debt servicing obligations and constrained government revenue.
Economists Call for Immediate Relief
More than 120 prominent global economists have urged an immediate suspension of Sri Lanka’s external sovereign debt payments. They argue that the country cannot manage recovery costs while continuing heavy repayment obligations.
The group includes Nobel Prize winner Joseph Stiglitz, development economist Jayati Ghosh, inequality scholar Thomas Piketty, former Argentine economy minister Martín Guzmán, and author Kate Raworth.
Cyclone Damage Deepens Fiscal Stress
Cyclone Ditwah caused widespread destruction across the island. Over 600 people died, while hundreds of thousands of homes and key infrastructure were damaged.
Anura Kumara Dissanayake described the disaster as the most severe natural crisis in the country’s history. Economists warned that rebuilding costs could overwhelm existing fiscal buffers.
Debt Burden Remains Heavy
Sri Lanka restructured about US$9 billion in debt last year following its 2022 default. However, campaigners warned that the deal still left a heavy burden on taxpayers.
Before the cyclone, annual debt repayments were projected to absorb around 25% of government revenue. This level remains high by global standards.
IMF Programme Adds Pressure
The economists noted that Sri Lanka has already taken on additional borrowing from the International Monetary Fund. They warned that new loans to fund disaster recovery could further weaken debt sustainability. According to the group, the current restructuring does not reflect the scale of environmental damage now facing the economy.
Call for Fresh Restructuring
The economists called for a new debt restructuring to restore long-term sustainability. They urged creditors to recognise changed conditions following the disaster.
Research by Debt Justice showed that even after the 2024 deal, private creditors are set to earn significantly higher returns from Sri Lanka than from lending to advanced economies. The group warned that without debt relief, recovery efforts risk being delayed, increasing long-term economic and social costs.
IMF to release USD 350 million to Sri Lanka within two weeks
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