Economists Jayati Ghosh, Joseph Stiglitz, Thomas Piketty, Martin Guzmán and Yanis Varoufakis are among 120 experts who have called for an immediate suspension of Sri Lanka’s external debt payments following Cyclone Ditwah. The experts say Sri Lanka needs a stay on payments and new debt restructuring to free up space for disaster recovery, social protection, reconstruction and development.[1]
Cyclone Ditwah has led to widespread flooding and deadly landslides, displacing 1.4 million people. Sri Lanka restructured its debt between 2023 and 2024, but this still left the country with one of the highest debt payment burdens in the world. Critics warned that a climate-driven disaster like a cyclone could push Sri Lanka back into debt crisis.[2]
In the statement the experts say:
“Sri Lanka is now confronting a severe economic shock triggered by the recent cyclone, extensive flooding and landslides, which has inflicted extensive damage to infrastructure, livelihoods, and key sectors of the economy. This environmental emergency is poised to absorb — and potentially exceed — the extremely limited fiscal space created by the current debt restructuring package. Additional external debt is already being taken on from the IMF, and more lending to deal with the impacts of the disaster is likely.”
The economists call for “immediate suspension of Sri Lanka’s external sovereign debt payments, and a new restructuring that restores debt sustainability under the new circumstances.”
In a separate statement, Sri Lankan civil society organisations have also called for a renegotiation of Sri Lanka’s loan programme with the IMF, and a new debt deal.[3] They call for a repudiation of high-interest commercial debt from private creditors. Signatories include Yukthi, Institute of Political Economy, Centre for Environmental Justice, and Law and Society Trust.
Research by Debt Justice has found that the debt restructuring deal in Sri Lanka will mean high-interest private creditors will make around 40% more profit than lending to the US government, even after debt relief. Sri Lanka’s government external debt payments even before Cyclone Ditwah struck were expected to be around 25% of government revenue, one of the highest rates in the world.[4]
Notes
[1] https://debtjustice.org.uk/wp-content/uploads/2025/12/Sri-Lanka-debt-statement_12.25.pdf
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