SRI LANKA’S IMF-LED DEBT RESTRUCTURINGAND LESSONS FOR SENEGAL

Ahilan Kadirgamar –

Sri Lanka defaulted for the first time in its history and went into its 17th IMF program combined
with debt restructuring with the IMF as arbiter; this has resulted in crippling conditionalities with
severe austerity measures unlike the previous programs.
The IMF’s Debt Sustainability Analysis is skewed towards the donors, particularly bondholders,
and there is little debt relief for Sri Lanka.
Sri Lanka did not default on its domestic debt, but the bondholders and the IMF have muscled the
country into carrying out Domestic Debt Restructuring drastically reducing the retirement funds
of workers.
The social cost of this IMF program with debt restructuring has been particularly devastating for
the working people, with rising poverty, unaffordability of energy and dwindling real incomes.
Defaulting on external debt should be avoided given the creditor-friendly debt restructuring
processes; and if unavoidable, a selective default on commercial borrowing should be considered
with a credit line from a bilateral donor.

This Policy brief is part of the editorial series published during the Experts meeting and International Conference organized by IDAN on Senegal’s debt Crisis (11 to 13 May,Dakar,Senegal).