A group of 121 internationally renowned economists and academics has issued a strong rebuttal to recent public comments defending Sri Lanka’s IMF-backed debt program, renewing calls for the immediate suspension of the country’s external sovereign debt repayments and a comprehensive restructuring to restore debt sustainability.
The group, whose statement is co-organised by the authors of the response, includes Nobel laureate Joseph Stiglitz, former World Bank chief economist, former finance ministers Martin Guzman and Yanis Varoufakis, and several former advisers to the United Nations and national governments. Many signatories cite direct experience with the social and economic harms associated with IMF programmes in countries facing debt distress. Their response follows comments made during an Ada Derana Hyde Park interview on 1 January 2026, which they argue misrepresented both Sri Lanka’s fiscal position and the intent of the economists’ intervention.
At the core of their critique is the IMF’s Debt Sustainability Analysis (DSA), which they say severely constrains fiscal space and undermines the newly elected government’s democratic mandate to prioritise social welfare, reconstruction, and environmental resilience. The economists argue that an independent DSA is essential to restoring Sri Lanka’s economic sovereignty and counterbalancing the influence of private creditors and predatory lending practices.
They dispute claims that Sri Lanka has avoided new borrowing following recent cyclone damage, noting that the IMF has extended a US$206 million Rapid Financing Instrument and India has provided assistance totalling US$450 million, including US$350 million in loans. While concessional, they stress these facilities add to the external debt stock and intensify future servicing pressures.
The group also challenges assertions that cyclone-related shocks do not justify renewed debt restructuring. They point out that even before the disaster, the IMF itself described Sri Lanka’s debt path as “knife-edged,” with an estimated 50% probability of a renewed default. With more than 25% of government revenue already allocated to external debt servicing and cyclone-related physical losses estimated by the World Bank at around US$4.1 billion, the economists argue that scarce foreign exchange should be prioritised for reconstruction rather than creditor payments.
Concerns were also raised over comparisons made between sovereign finances and household budgeting. The economists describe such analogies as misleading, warning they can justify underinvestment and delayed emergency responses. They emphasise that, unlike households, a sovereign state with monetary authority can meet domestic obligations through monetary financing, with inflationary risks managed via taxation.
Responding to claims that their group opposes all debt repayment, the economists reiterated that their position focuses on burden-sharing, particularly by private creditors who hold nearly 40% of Sri Lanka’s external debt stock but receive over 50% of external debt payments due to higher interest rates. They argue that lenders who charged risk premiums must also bear the consequences of those risks, especially given Sri Lanka’s first-ever sovereign default in April 2022.
The group rejected suggestions that their intentions are not to help the country, stating their work is motivated by solidarity with underprivileged populations in Sri Lanka and the wider Global South, who bear the brunt of debt and climate crises. They highlighted broader concerns about the legitimacy of the global financial architecture, the dominance of the reserve currency system, and the lack of democratic accountability in international financial institutions.
Looking ahead, the economists estimate reconstruction costs at US$6–7 billion and stress the need for ecologically sensitive rebuilding to reduce future climate vulnerability. They warn that ongoing debt servicing will remain a binding constraint on both fiscal and external resources, particularly as businesses seek to import machinery and materials to resume operations.
The group has urged the Central Bank of Sri Lanka to support the government and the Finance Ministry in establishing a dedicated team, working with external experts, to conduct an independent debt sustainability analysis. They argue such an initiative would strengthen Sri Lanka’s position in future IMF reviews and provide a credible pathway toward a sustainable debt outcome, including the elimination of odious debt.
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