How Debt Restructuring Impacts the Economy in Sri Lanka
How Debt Restructuring Impacts the Economy in Sri Lanka Introduction Debt restructuring is a financial strategy used by countries facing significant debt burdens to renegotiate terms with creditors. This process can involve extending payment deadlines, reducing interest rates, or even reducing the principal amount owed. For Sri Lanka, a nation grappling with economic instability, debt restructuring has become a crucial tool for managing its financial challenges. This article explores the impacts of debt restructuring on Sri Lanka's economy, delving into both the short-term and long-term consequences. Historical Context of Sri Lanka’s Debt Sri Lanka's debt issues have been escalating over the past decades. The country’s debt-to-GDP ratio has been on a worrying upward trajectory, driven by various factors including persistent budget deficits, high public expenditure, and substantial borrowing for infrastructure projects. The 2019 Easter bombings and the subsequent ...