The International Monetary Fund says that Sri Lanka can be cited as a warning of the additional consequences that a developing country may experience due to excessive debt and a lack of sound policies.
Kristalina Georgieva, Managing Director of the International Monetary Fund, said this while emphasizing the need for strong economic policy intervention for developing countries.
She points out that world food and commodity prices have risen rapidly with the Russia-Ukraine war and the global financial situation is in a severe crisis.
She further warns that the economy of developing countries is at risk of further collapse due to these conditions.
This is her statement regarding Sri Lanka
“Later this month we will project a further downgrade to global growth for both 2022 and 2023 in our World Economic Outlook Update. Moreover, downside risks will remain and could deepen—especially if inflation is more persistent—requiring even stronger policy interventions which could potentially impact growth and exacerbate spillovers particularly to emerging and developing countries. Countries with high debt levels and limited policy space will face additional strains. Look no further than Sri Lanka as a warning sign.”