Sri Lanka’s default could be the first of many
Soaring commodity prices and higher interest rates imperil the finances of many poor countries
THE ECONOMIC fallout from Russia’s invasion of Ukraine now includes a sovereign default. On April 12th Sri Lanka said that it would suspend payments on the $35bn its government owes foreign creditors. Surging food and energy prices, the result of wartime disruption to commodity markets, have dealt a heavy blow to an economy that was already mismanaged, and brought even erstwhile government supporters onto the streets in protest. Sri Lanka may not be the only country to run aground in the hazardous conditions prevailing in the global economy.
This article appeared in the Finance & economics section of the print edition under the headline “Default settings”
Finance & economics April 16th 2022
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