Verité Research | English
Verité Research | English
May 29, 2025 at 01:15 PM
The CBSL governor claimed that: (i) countries generally experience an output loss after a crisis that requires time to reverse, and (ii) Sri Lanka will reach its 2018 output level by 2026—or, at the latest, 2027. Claim 1: In the past ten years, 15 sovereign debt restructuring episodes have occurred across 12 countries. In 11 of these episodes, GDP contracted either in the year of the debt suspension or the year immediately following. Only in four of these episodes was there no output loss (GDP contraction). Claim 2: http://FactCheck.lk applied the IMF’s latest growth projections for Sri Lanka, which estimate real GDP growth of 3% for 2025 and 2026. At this projected pace, Sri Lanka’s real GDP is expected to surpass its 2018 pre-crisis output level by 2027. In sum, the governor is correct in asserting that output losses commonly follow a debt crisis, and that Sri Lanka is on track to regain its 2018 output level by 2027. Therefore, we classify the governor’s claim as TRUE.
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