Lessons from bankrupt Sri Lanka

SRI Lanka’s bankruptcy is a cautionary tale of a nation that goes bust in modern times. It is almost unthinkable any nation could be left with hardly RM7bil in its reserves. It can’t even pay for essential imports. With shortages and soaring inflation, the country is doomed economically.

Almost immediately, the government announced a temporary suspension of repayment of all external debt. For the record, Sri Lanka’s reputation of external debt servicing since its independence in 1947 has been nothing less than stellar. Understandably, the International Monetary Fund (IMF) is being called in to help design an economic recovery programme and for emergency financial assistance.