JANUARY 6, 2022 INSIGHT: SOUTH ASIA Sri Lanka mired in crises as country seeks crucial IMF assistance THE TAKEAWAY IMPLICATIONS At the heart of Sri Lanka’s economic woes, which In April 2022, Sri Lanka defaulted on its foreign debt caught the attention of the international community for the first time. [...] At the country tumbled into chaos as public protests against turn of the year, the island nation is more dependent the then-government turned violent, eventually than ever on international assistance as it pursues forcing the president, Gotabaya Rajapaksa, to flee austerity measures to secure International Monetary the country and resign. [...] However, at the root 20,000 civil servants retire, due in large part to the of its troubles is Sri Lanka’s unsustainable foreign government’s move to reduce the retirement age debt burden. [...] According to Human Rights Watch, the economic crisis has brought Sri Lanka to the brink of a humanitarian crisis, in which 28 per cent of the population is ‘food-insecure.’ The poverty rate also doubled in 2022. [...] While the IMF deal calls for mitigating the impact of the crisis on the poor, it requires structural adjustments that could result in cuts to social sector spending in the years to come.
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