Sri Lanka Enters Default, Warns of Surging Inflation

Sri Lanka is facing an unprecedented economic crisis, marked by its failure to pay $12 billion in overseas bonds, signaling severe inflation and economic instability. The country is in preemptive default and requires debt restructuring, which could take six months. Political instability exacerbates the situation, with no finance minister and a central bank governor threatening resignation. Inflation is expected to rise from 30% to 40%, and the country faces shortages in essential supplies. The resignation of the former Prime Minister has led to a political transition, but opposition leaders are reluctant to join the new cabinet, worsening the crisis.

What role does the International Monetary Fund play in Sri Lanka's current situation?

What challenges are policymakers facing in Sri Lanka after the resignation of the former Prime Minister?