ISAS South Asia Scan

After facing a severe balance of payments crisis, Sri Lanka defaulted on its foreign debt in April 2022, sparking its worst economic downturn in over 70 years. This South Asia Scan explores Sri Lanka’s economic crisis and sovereign debt default, uncovering causes such as economic mismanagement and policy missteps, while also highlighting early 2024 stabilisation led by the new government. The analysis examines key policy lessons, the benefits of IMF support, and the role of Indian aid in recovery while emphasising potential risks with upcoming presidential and parliamentary elections.