DEBT ANALYSIS OF SRI LANKA: FACTORS AND FINANCES

Socio – economic condition in Sri Lanka has reached its bottom due to various social, political and Economic mismanagement. The tip of the ice berg has much more to do with extravagant public debt handling led by dynastic rulers of the tourist island. A fall in tax revenue collection, a spike in external debt to GDP, interest payments, and short-term debt are the underlying economic factors. Among the political factors, successive governments, to be in the government, resorted to short-lived and unsustainable remedies like borrowings from external creditors. The paper analyses series and sequences of debt crisis through the prism of economy, politics and ethnic issues plaguing Sri Lanka. KEY WORDS: Tax GDP ratio, debt sustainability analysis, inflation, political stability