121 Leading Economists Urge Sri Lanka to Halt Debt Payments Amid Climate Disaster

Prominent academics and macroeconomists are calling for Sri Lanka to suspend its external debt obligations following the devastation caused by Cyclone Ditwah, describing the situation as a “climate shock” that demands urgent action.

Statement by leading economists and academics on Sri Lanka’s Climate Crisis and IMF Restructuring Deal

Sri Lanka’s 17th IMF sovereign debt restructuring agreement is executed under the 48-month IMF Extended Fund Facility (EFF) and provides limited debt service relief.  It therefore failed to provide a sustainable solution to Sri Lanka’s debt crisis and left Sri Lanka extremely vulnerable to external shocks – particularly climate-induced disasters.

Those shocks have now hit with the catastrophic aftermath of Cyclone Ditwah – marked by widespread flooding, deadly landslides, displacement of more than 1.4 million people, and nearly 800 individuals either dead or missing.  The concern over the country’s future deepens. Under the current IMF-supported arrangement, creditors agreed to reduce the size of Sri Lanks debt payments, measured in net present value terms, by 17%.

This left Sri Lanka with government external debt payments of around 25% of revenue, one of the highest rates in the world. According to IMF staff, under the IMF’s own models, Sri Lanka has a 50% chance of defaulting and/or needing another debt restructuring, even after debt relief. The IMF publicly said that “debt risks will remain high for many years”. 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.

Given Sri Lanka’s vulnerabiity to climate shocks, the scale of destruction underscores how insufficient the present debt deal is in safeguarding economic stability. The country’s already fragile socio-economic landscape heightens the risks: diminished revenues, rising reconstruction costs, and increased import needs could quickly undermine projected gains from the restructuring. In this context, the nation remains acutely exposed to further external shocks, whether climatic or economic, highlighting the need for a more comprehensive, resilience-oriented debt solution. The IMF itself has acknowledged that Sri Lanka’s path to “debt sustainability remains knife-edged,” with the country only narrowly meeting targets while social-spending benchmarks were missed.

In light of the current climate catastrophe that has hit Sri Lanka, we wish to highlight the following points:

• The existing restructuring – modest, conditional and tied to uncertain macroeconomic outcomes – is inadequate to protect the vulnerable majority from recurrent climate and external shocks.

• By prioritising debt service continuity over deep debt relief, the IMF programme perpetuates structural exposure of Sri Lanka’s economy and population to future disasters.

• Continuing to impose debt repayment obligations under these conditions fails to consider Sri Lanka’s capacity to service debt, which should instead be based on its foreign exchange (forex) earnings.
•  Current onerous debt servicing undermines efforts to rebuild lives, restore agriculture, infrastructure, and provide social protection. Therefore, we call for immediate suspension of Sri Lanka’s external sovereign debt payments, and a new restructuring that restores debt sustainability under the new circumstances.

We propose the adoption of a genuinely sustainable framework that:

• Recognises climate-driven disasters as systemic, not exceptional, shocks.

• Provides significant debt cancellation – with no punitive conditions – to free up fiscal space for disaster recovery, social protection, reconstruction and development.

• Prioritises human welfare, environmental protection, and long-term viability over f inancial obligations to external creditors. Only a fundamental rethinking of the global debt regime – one based on justice and sustainability – will offer Sri Lanka a realistic chance to recover from the climate impacts and build an equitable future for all.

Coordinated by:  Professor Jayati Ghosh; Debt Justice, UK;  Institute of Political Economy, Sri Lanka.

SIGNATORIES 1. Professor Jayati Ghosh, University of Massachusetts-Amherst, USA 2. Professor Joseph Stiglitz, Columbia University, USA 3. Professor Thomas Piketty, Science Po/Paris School of Economics, France 4. Professor Yanis Varoufakis, University of Athens, Greece 5. Professor Martin Guzman, Columbia University, USA 6. Professor C P Chandrasekhar, University of Massachusetts-Amherst, USA 7. Professor Stephanie Kelton, Stony Brook University, USA 8. Professor Jason Hickel, ICTA-University of Barcelona, Spain/LSE, United Kingdom 9. Professor Guy Standing, SOAS, University of London, U.K. 10. Professor Fadhel Kaboub, Global Institute for Sustainable Prosperity, USA 11. Professor Gary Dymski, Leeds University, United Kingdom 12. Professor Sudip Chaudhuri, India Institute of Management – Calcutta, India 13. Professor Kevin Gallagher, Boston University, USA 14. Professor Radhika Balakrishnan, Rutgers University, USA 15. Professor Gerald Epstein, University of Massachusetts, USA 16. Professor Utsa Patnaik, Jawaharlal Nehru University, India. 17. Professor Mariana Reis Maria, Universidade Estadual de Campinas, Brazil 18. Professor Irene van Staveren, Erasmus University – Rotterdam, The Netherlands 19. Professor Juan Carolos Moreno-Brid, UNAM-Mexico 20. Professor Surajit Mazumdar, Jawaharlal Nehru University, India 21. Professor Howard Nicholas, International School of Business – Ho Chi Min, Vietnam 22. Professor A Haroon Akram-Lodhi, Trent University, Canada 23. Professor Gunseli Berik, University of Utah, USA 24. Professor Sergio Cesaratto, University of Sienna, Italy 25. Professor Yavuz Yazar, University of Denver, USA. 26. Professor Suzanne Bergeron, University of Michigan – Dearborn, USA 27. Professor S Subramanium, Madras Institute of Development Studies, Chennai, India 28. Professor David Rucio, Notre Dame University, USA 29. Professor M V Lee Badgett, University of Massachusetts – Amherst, USA 30. Professor Julie Nelson, University of Massachusetts – Boston, USA 31. Professor Farida Khan, University of Colorado, USA 32. Professor Smriti Rao, Assumption University, USA 33. Professor Gustavo Indart, University of Toronto, Canada 34. Professor R Ramakumar, Tata Institute of Social Studies – Mumbai, India 35. Professor Randy Albelda, University of Massachusetts- Boston, USA 36. Professor Yana Rodgers, Rutgers University, USA 37. Dr Isabella Weber, University of Massachusetts – Amherst, USA 38. Dr Lucas Chancel, Science Po/Paris School of Economics, France 39. Dr Dean Baker, University of Massachusetts – Amherst, USA 40. Dr Ndongo Samba Sylla, IDEAS, Senegal 41. Dr Pedro Rossi, Global Fund for a New Economy, Brazil 42. Dr H Himanshu, Jawaharlal Nehru University, India 43. Dr Ingrid Kvangraven, Kings College – London, U.K. 44. Dr Surbhi Kesar, SOAS – University of London, U.K 45. Dr N
45. Dr Narayani Sritharan, AID Data, USA 46. Dr Tracey Freiberg, John Jay College, USA 47. Dr Ajit Zacharias, Levy Institute – Bard College, USA 48. Dr Smita Ramnarain, University of Rhode Island, USA 49. Dr Sheba Tejani, Kings College – London, U.K. 50. Professor Vijay Prashad, TRICONTINENTAL Institute, Argentina 51. Professor Barbara Harriss-White, Oxford University, U.K. 52. Professor Shirin Rai, SOAS – University of London, U.K 53. Professor Kanchana N. Ruwanpura, University of Gothenburg, Sweden 54. Professor Alessandra Mezzadri, SOAS – University of London, U.K 55. Professor Raj Patel, University of Texas – Austin, USA 56. Professor Kanishka Goonewardena, University of Toronto, Canada 57. Professor Vasuki Nesiah, New York University, USA 58. Professor Aram Ziai, Kassel University, Germany 59. Professor Matthias Goldman, EBS University, Germany 60. Professor Nata Duvvury, National University of Ireland – Galway, Ireland 61. Professor Maggie Leung, University of Amsterdam, The Netherlands 62. Professor Padraig Carmody, Trinity College – Dublin, Ireland 63. Professor Bart Klem, University of Ghent, Belgium 64. Professor Roar Høstaker, Inland Norway University, Norway. 65. Professor Benjamin Selwyn, University of Sussex, U.K. 66. Professor John Morrissey, National University of Ireland – Galway, Ireland 67. Professor Kanishka Jayasuriya, Murdoch University, Australia 68. Professor Wilfried Swenden, University of Edinburgh, United Kingdom 69. Professor Roger Jeffery, University of Edinburgh, United Kingdom 70. Professor Naomi Hossain, SOAS – University of London, U.K 71. Professor Page Fontana, Columbia University, USA 72. Professor Dina Siddiqi, New York University, USA 73. Professor Christoper Cramer, SOAS – University of London. U.K. 74. Professor Ruvani Ranasinha, Kings College – London, U.K. 75. Professor Maria Heim, Amherst College, USA 76. Professor John Hariss, Simon Fraser University, Canada 77. Professor Nirmala Salgado, Augustana College, USA 78. Professor Vinay Gidwani, University of Minnesota, USA 79. Professor Dia da Costa, University of Alberta, Canada 80. Professor Atilio Boron, University of Buenos Aires, Argentina 81. Professor Anne Blackburn, Cornell University, USA 82. Professor Deepta Chopra, University of Sussex, U.K 83. Professor Muthucumaraswamy Sornaraha, National University of S 84. Professor Rahul Mukherji, Heidelberg University, Germany 85. Dr Juan Pablo Bohoslavsky, CONICET and National University of Rio Negro (CIEDIS) – Argentina. 86. Dr Mieke Lopes Cardozo, University of Amsterdam, The Netherlands 87. Dr Thiruni Kelegama, University of Oxford, U.K. 88. Dr Giselle Thompson, University of Alberta, Canada 89. Dr Nimanthi Rajasingham-Perera, Colgate University, U.S.A 90. Dr Andrew Newsham, SOAS – University of London, U.K. 91. Dr Bhumika Muchchala, New School University, USA 92. Dr Alexandre da Costa, Alberta University, Canada/Brazil 93. Dr Sharika Thiranagama, Stanford University, USA 94. Dr Amali Wedagedara, Bandaranaike Centre for International Studies, Sri Lanka 95. Dr Eva Ambos, Tubingen University, Germany 96. Dr Paul Gilbert, University of Sussex, United Kingdom 97. Dr Priyadarshini Premarathne, University of Peradeniya, Sri Lanka 98. Dr Farah Mihlar, Oxford Brookes University, U.K 99. Dr MeeNilancko Theiventharan, University of Oslo, Norway 100.Dr Shyamain Wickramasingha, University of Sussex, U.K 101.Dr Joeri Scholtens, University of Amsterdam, The Netherlands 102.Dr Susantha Rasnayake, University of Peradeniya, Sri Lanka  103.Dr Alicia Yamin, Harvard University, U.S.A. 104.Dr Lara Merling, UCL – Institute for Innovation Public Purpose, U.K. 105.Dr Rohith Jyothish, O. P. Jindal Global University – Sonipat, India 106.Dr Jon Philips, SOAS – University of London, U 107.Anne Pettifor, Jubilee Campaign, U.K 108.Tim Jones, Debt Justice – U.K., U.K. 109.Kate Raworth, Environmental Change Institute, Canada 110.Veronica Gróndona, ICRICT, Argentina 111.Maia Colodenco, Suramericana Vision, Argentina 112.Dr. Farwa Sial, IDEAS – Asia Region 113.Emma Bury, AID Data, USA. 114.Robin Jespert, Goethe University, Germany 115.Kevin Cashman, John Jay College – CUNY, USA 116.Gabriele Koehler, UNRISD, Switzerland 117.Vincent Chee, Raffles College of Higher Education, Singapore 118.Matheus Machado, IBMEC – Brazil 119.Chiara Subrizi, University Urbino Carlo Bo, Italy 120.Kowsalya Duraiswamy, Sri Lanka 121.Emma Burgisser, Christian AID, United Kingdom