How Sri Lanka spiralled into crisis and what happens next
Al JazeeraThe South Asian island nation is experiencing an unprecedented economic collapse that has pushed the government into a deep crisis. Analysts say economic mismanagement by successive governments weakened Sri Lanka’s public finances, leaving national expenditure in excess of its income and the production of tradable goods and services at inadequate levels. Rating agencies, concerned about government finances and its inability to repay large foreign debt, downgraded Sri Lanka’s credit ratings from 2020 onwards, eventually locking the country out of international financial markets. Earlier in 2022, President Rajapaksa asked China to restructure repayments on around $3.5bn of debt owed to Beijing, which in late 2021 also provided Sri Lanka with a $1.5bn yuan-denominated swap. In a statement on Tuesday, the Joint Apparel Association Forum, which represents Sri Lanka’s vital apparel industry, said it was “critical” for a new government to take charge.