International academics speak out on dealing with Sri Lankan debt
Professor Gary Dymski is one of a number of international academics to sign a letter on the Sri Lankan debt crisis.
The group of 182 international economists, financial professionals, development experts and other civil society leaders have issued a statement concerning Sri Lanka’s external debt crisis.
The letter says that debt negotiations are now at a "crucial stage" and that there was previously a lack of transparency in the process.
Private creditors own almost 40% of Sri Lanka’s external debt stock, mostly in the form of International Sovereign Bonds (ISBs), but higher interest rates mean that they receive over 50% of external debt payments. Such lenders charged a premium to lend to Sri Lanka to cover their risks, which accrued them massive profits and contributed to Sri Lanka’s first-ever default in April 2022. Lenders who benefited from higher returns because of the “risk premium” must be willing to take the consequences of that risk.
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