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Sri Lanka will struggle to escape its debt trap

Wednesday, June 19, 2019

Subject

Sri Lanka's debt problem.

Significance

Sri Lanka late last month said it was planning to issue international sovereign bonds (ISBs) worth some 1.5 billion dollars, helping to repay loans soon to mature. The country’s gross outstanding debt stock rose to nearly 70% of GDP in 2018 from just under 40% in 2008.

Impacts

  • Debates around the presidential election due later this year will likely be dominated by security concerns rather than the economy.
  • Political instability caused by rifts within the government will damage investor confidence in the country.
  • Sri Lanka will step up efforts to attract tourists, hoping to sustain a key source of foreign exchange earnings.
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