Somkiat Tangkitvanich: Athukorala's paper provides an extensive analysis of Sri Lanka's recent debt crisis. It examines the crisis origins and progression, highlighting how policy decisions, external shocks, and the COVID-19 pandemic aggravated Sri Lanka's economic vulnerabilities.
The paper also evaluates the response strategies of the Sri Lankan government and international organizations, especially the IMF. It argues that timely action by the government with IMF support could have lessened the crisis's economic and sociopolitical costs while preventing a severe default. However, it critiques the IMF's Extended Fund Facility arrangement (EFF) for Sri Lanka, noting its excessive emphasis on fiscal adjustment on the revenue side and inadequate focus on expenditure reduction despite obvious fiscal extravagance and wide-spread corruption. The paper also points out the IMF's overly optimistic view of Sri Lanka's ability to access global capital markets at reasonable interest rates at the program's end and its insufficient attention to the balance...