By: Staff Writer
November 16, Colombo (LNW): Sri Lanka’s contentious 2022 decision to suspend external debt repayments has resurfaced, with former Finance Minister Ravi Karunanayake challenging the legality and transparency of the move that pushed the country into its first-ever sovereign default. His renewed scrutiny has revived debate over whether the suspension announced by newly appointed Central Bank Governor Dr. Nandalal Weerasinghe was a necessary economic safeguard or an unconstitutional act executed without proper authority.
Karunanayake, in a detailed letter to President Anura Kumara Dissanayake, has demanded clarity on who authorised the April 12, 2022 declaration halting all foreign debt servicing. He alleges that neither Parliament nor the Cabinet approved the decision and that no legal framework permitted the Central Bank or Finance Ministry to unilaterally suspend payments. The move, he argues, “redefined the country’s economic destiny without the people’s representatives being consulted.”
Media reports from the time confirm that Dr. Weerasinghe, only days into office, told reporters that debt repayment had become “challenging and impossible,” describing the suspension as a temporary measure until negotiations with the IMF and creditors progressed. It was widely portrayed as a prudent step to conserve scarce foreign reserves for critical imports, including fuel, medicine and essential food items.
However, no official documentation Cabinet papers, Monetary Board decisions or advice from the Attorney General has ever surfaced confirming formal approval for the default announcement. The absence of a clear decision-making trail has intensified questions over procedural legitimacy.
The economic backdrop in early 2022 was catastrophic. By March, Sri Lanka’s usable reserves had dwindled to near-zero. Total official reserves stood at US$1.9 billion most of it unusable while foreign debt obligations for the year exceeded US$6 billion.
World Bank data later revealed that by mid-2022, reserves excluding the Chinese swap line had plunged below US$400 million. Maintaining debt payments and financing essential imports had become virtually impossible.
Economists generally agree that default was inevitable under these conditions. But the crux of Karunanayake’s argument is that inevitability does not override constitutional procedure. A sovereign debt default, he stresses, cannot be declared through a press briefing alone.
The fallout was immediate and devastating. International credit rating agencies slashed Sri Lanka to junk status, the rupee plummeted by nearly 80 percent, and inflation soared above 60 percent. Millions were pushed deeper into poverty, and by 2023, the government was compelled to secure a US$3 billion IMF Extended Fund Facility to stabilise the economy. Sri Lanka’s exclusion from global capital markets continues to hamper recovery efforts.
Three years on, the questions remain unresolved. Karunanayake’s renewed call for accountability highlights what many analysts describe as a deeper governance failure, a life-altering national decision made without transparency, legal clarity or parliamentary oversight. As Sri Lanka struggles to rebuild trust among investors and citizens, one question continues to loom large: not just who announced the default, but who actually authorised it.
