Sri Lanka debt restructuring

Anura Kumara Dissanayake is well aware that his handling of Sri Lanka’s vulnerable economy will determine his political future.

The agreement further entangles Sri Lanka in an exploitative global debt system that prioritizes creditor profits over the country's development and people's welfare.

The deal is expected to reopen the doors to bilateral transactions and the resumption of foreign projects that stalled when the island nation defaulted.

What three different countries can tell us about the global debt problem – and China’s role in both debt distress and debt relief.

Sri Lanka will not fulfill its renewable energy commitments under current economic conditions. But what if the government could simultaneously tackle its climate, energy, and debt crises?

Climate finance is essential to address both the country's debt crisis and its acute climate vulnerabilities.

In Sri Lanka, Macron continued his message that France is ready to uphold the sovereignty of island nations susceptible to the negative influence of China.

With Beijing extending debt restructuring assurances, the last obstacle in the way of Sri Lanka securing the bailout deal has been removed.

Sri Lanka’s default highlights the dangers of relying on international sovereign bonds – with high interest rates – to fund development.

India has already given the necessary assurances to the IMF. Other bilateral creditors, including China, have not yet but Sri Lanka says there’s progress in the ongoing discussions. 

Colombo is still waiting on Beijing’s approval for debt restructuring.

Sri Lanka’s debt restructuring is deeply embedded both within a global emerging market debt crisis and a moment of rethinking within China about its global role as a creditor. 

Sri Lanka is nearly bankrupt and has suspended repaying its $51 billion foreign debt, of which it must repay $28 billion by 2027.

The package is contingent on assurances from creditors, including China, India and Japan that debt sustainability will be restored.

How did Sri Lanka’s economic crisis get so bad – and how can the country move forward from here?

China's role in lending to Sri Lanka has expanded in the last 20 years, but fewer Chinese loans would not have saved the country from its current economic crisis.

China's general approach to debt distress is to seek bespoke negotiations and preferential treatment – something that Sri Lanka must avoid at all costs.