by John Rubino
Sri Lanka’s collapse is front of mind for many.
Protesters fed up with crippling shortages of essential food and fuel items are on the streets, prompting multiple members of Prime Minister Mahinda Rajapaksa’s cabinet to offer to resign late on Sunday. Social unrest will probably accelerate a restructuring of some $44 billion of international sovereign debt. Though Sri Lanka’s problems follow years of mismanagement, its speedy unravelling is a warning to sturdier economies from Europe to Asia suddenly grappling with a spike in the cost of living.
A current account crisis has intensified after the West fired its sanctions bazooka at Russia as punishment for its invasion of Ukraine. Rolling blackouts and a state of emergency are frightening away remaining tourists, a crucial source of foreign exchange.