After growing anger at the economic collapse in Sri Lanka, President Rajapaksa fled the country in July 2021. Hamstrung by external debt of more than $50 billion owed to creditor nations and private bondholders, public sentiment had finally boiled over as the country’s politicians could not find suitable answers to remedy the economy. Its eventual default represented its first sovereign debt default since independence in 1948.
Sri Lanka’s woes are part of a gloomy global pattern that is playing out. According to Bloomberg, over a dozen developing markets risk defaulting on their debt repayments.
Global trends and the shock of Russia’s invasion of Ukraine have dragged a variety of countries into trouble, from seemingly well-managed countries like Ghana to the wheat-dependent economy of Egypt. In each case, economic crisis threatens political stability.
As the rapidly changing global economic environment continues apace, is the collapse of the Sri Lankan economy the start of a developing market sovereign debt crisis?
This expert panel discuss the following key questions:
What are the regional variations seen within the debt crisis?
Has concern increased around Chinese BRI investment and the potential to fall into ‘debt-trap diplomacy’?
Have international institutions such as the IMF and World Bank sounded the alarm loudly enough about the crisis?
Are Western countries seen as a viable support option, particularly with the war in Ukraine taking much of their attention and efforts?
Will we likely see a rise in populist actors across the affected countries and what would be the results of this?
Could a potential emerging market debt crisis in 2022–2023 have wider global ramifications?
This event is part of Chatham House’s ongoing work on reinvigorating multilateralism.