Economics Research Paper onSri Lanka’ Economic Crisis

Author(s)	Master Raphael Rusten
Country	India
Abstract	Sri Lanka’s economic crisis (2022-2024) was both economic and geopolitical. Internally, a mix of poor policies which include but are not limited to tax cuts and bans on chemical fertilizers which left the economy vulnerable to external shocks. That vulnerability resulted in an economic collapse, record high inflation and social unrest. Externally, the crisis became an arena for a strategic competition between two giants; India and China. China showed support through project financing while India provided emergency relief and credit lines. This paper argues that Sri Lanka’s economic crisis was not the result of China’s debt trap diplomacy, but rather domestic mismanagement, while its strategic location in the Indian Ocean transformed the crisis into an unexpected opportunity to leverage. The suggested measures to take in this scenario would be for the country to restructure its debt, strengthen financial discipline and balancing its relationships among competing allies.
Keywords	Economic Crisis, Geopolitics, Debt Restructuring, India–China Rivalry, Debt-Trap Diplomacy, Domestic Mismanagement, International Relations.
Field	Sociology > Economics
Published In	Volume 7, Issue 6, November-December 2025
Published On	2025-11-09
DOI	https://doi.org/10.36948/ijfmr.2025.v07i06.58549

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