More debt won't solve Sri Lanka's debt crisis
War on WantJul 29, 2022
Sri Lanka and the International Monetary Fund (IMF) have reportedly reached a preliminary agreement on an emergency loan to the island nation, which currently faces its worst economic crisis since its independence in 1948.
A formal announcement is expected to be made on Thurs. as the IMF's second mission to Colombo in three months - which was scheduled to conclude on Wed.- was extended by a day.
While this sounds like good news, this move won't actually solve the country's debt crisis. On the contrary, it will only further confine Sri Lanka to a vicious foreign debt circle that it has been trapped in for decades, with international financial institutions meddling in domestic affairs. If the intention is to help them handle this crisis, Sri Lanka's debt should be forgiven.
The IMF has long been accused of creating vicious debt circles and interfering in domestic affairs, but these claims aren't accurate and those making them offer no viable alternative for countries in economic crisis. Sri Lanka is right to deal with the IMF as its assistance will be helpful to tackle the current crisis and to create a long-lasting positive macroeconomic environment.