When Sri Lanka defaulted on its foreign debt for the first time in its history in 2022, it sparked fears of more sovereign defaults to come. Global financial institutions say debt is at the highest level in decades and about 60 percent of low-income countries are now in, or at risk of, debt distress. As interest payments come due in the later half of 2023, are we going to see a string of defaults leading to a global financial contagion?

We look at the human cost when a country goes bankrupt, trace how so much bad debt was created and investigate the so-called debt traps. Sri Lanka has pinned its immediate hopes on a multi-billion-dollar bailout deal with the International Monetary Fund. But that comes with austerity measures that the IMF itself has said reduces growth. Can Sri Lanka change its economic course and avoid another bailout or default in future?

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00:00 Introduction
01:57 Debt crisis triggers medicine shortages
09:16 What caused the debt default?
13:32 The dark side of Hambantota’s ambitious development plan
18:26 China's heavy investment in Sri Lanka
25:30 The biggest loan repayment burden
26:48 Will a 17th IMF bailout help?
33:31 What’s holding up debt restructuring?
36:15 How to help countries in debt distress or default
38:51 Cooperatives help put food on people’s plates
45:21 Is there a way forward out of default and debt distress?

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About the show: According to the IMF, 60 percent of low-income countries are either already in debt distress or at high risk of debt distress. Will we see a global financial contagion?
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