Kristalina Georgieva, the head of the International Monetary Fund (IMF), has used the example of Sri Lanka’s exceptional economic crisis to caution other nations that they might experience a similar circumstance given their high debt levels and constrained policy options.
“I wish the global economic outlook was as bright as the sky in Bali, but unfortunately, it is not. The outlook has darkened significantly, and uncertainty is exceptionally high. Downside risks about which the IMF had previously warned have now materialised,” International Monetary Fund Managing Director Kristalina Georgieva said at the meeting of G20 Finance Ministers and Central Bank Governors in Indonesia.
“Countries with high debt levels and limited policy space will face additional strains. Look no further than Sri Lanka as a warning sign,” Ms Georgieva said on Saturday.
The IMF MD’s remarks come at a time when Sri Lanka is experiencing its most severe economic crisis and finds itself in a difficult situation where it is unable to pay for imports of gasoline, food, and medication because of a severe FX issue.
In mid-April, the government declared bankruptcy for not paying its foreign debt.
Last week, President Gotabaya Rajapaksa was removed from office as a result of his mishandling of the economy.