The main contributors to Sri Lanka’s current financial crisis are the country’s borrowing pattern and foreign debt obligations.
The current economic crisis in Sri Lanka is a major consequence of the country’s tendency to borrow from debtor nations as well as multilateral institutions, characterized by an uncertain sovereign debt structure. At the end of March 2022, external debt service payments to Sri Lanka were US $ 7 billion, compared to US $ 1.9 billion, while on April 12, the country revealed that it was defaulting on its external debt. US $ 51 billion awaits bailout from International Monetary Fund (IMF). The finance ministry announced that an estimated $ 3 million in external aid would be needed over the next six months to restore the supply of essential commodities and at the same time pave the way for a recovery for the ailing economy.