Sri Lanka is today facing dire economic circumstances. Ranga Jayasuriya, researcher and former senior fellow at Institute of National Security Studies, Sri Lanka, spoke with Rudroneel Ghosh about what led to the mess:

How have things come to this pass for Sri Lanka?

Actually the origin of today’s crisis dates back to the 2000s when Sri Lanka first started issuing sovereign bonds. Since then we have accumulated so much debt that it is no longer sustainable. On top of that we have a large chunk of Chinese loans that we have to service. In fact, this year alone we have foreign debt of $6.8 billion out of which $1.5 billion is sovereign debt. The rest is between governments and multilateral institutions. The government never had a concrete strategy to solve the problem. It adopted a piecemeal approach of paying back the loans by banking on foreign remittances and tourism revenue.

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