On March 31, 2022, crowds gathered near President Gotabaya Rajapaksa’s private residence in Mirihana as shortages and long power cuts worsened. Police used tear gas and water cannon, and the protest helped trigger a broader, sustained protest wave known as the Aragalaya (“struggle”). This moment is widely treated as an early turning point from scattered anger to organized mass mobilization.
On April 1, 2022, the government declared a state of emergency as demonstrations expanded and political pressure on the president increased. Emergency rules gave security forces wider powers, becoming a major flashpoint for civil-liberties concerns. The move signaled that the economic crisis had become a national political crisis.
On April 8, 2022, Sri Lanka’s central bank sharply raised key policy interest rates by 700 basis points to slow inflation and stabilize the currency. The size of the increase underlined how severe the balance-of-payments crisis had become (a shortage of foreign currency needed to pay for imports). Higher rates also made borrowing more expensive for households and businesses, worsening the recession risk.
On April 12, 2022, the government announced it would suspend payments on its foreign debt as a “last resort,” effectively entering default. This step reflected depleted foreign reserves and difficulty importing essentials like fuel, food, and medicine. Default reshaped the crisis by forcing negotiations with creditors and increasing urgency around an IMF program.
On May 9, 2022, Prime Minister Mahinda Rajapaksa resigned after weeks of protests and a day of serious violence following attacks on demonstrators. His resignation aimed to calm unrest but did not end demands for deeper political change. The event marked a major crack in the Rajapaksa family’s hold over the government during the economic breakdown.
On May 12, 2022, President Gotabaya Rajapaksa appointed Ranil Wickremesinghe as prime minister to form a new government and seek a path to stabilization. Wickremesinghe, a long-time political figure, was seen by many protesters as part of the existing political establishment. His appointment shifted crisis management toward negotiations with foreign partners and the IMF, while protests continued.
On July 9, 2022, protesters broke through security and occupied major state buildings, including the president’s official residence, after months of shortages and political stalemate. Political leaders announced that President Gotabaya Rajapaksa would resign. The occupation became a defining image of the protest movement’s peak and the collapse of the administration’s authority.
On July 14, 2022, Gotabaya Rajapaksa resigned as president after leaving Sri Lanka amid mass protests. His resignation created a constitutional vacancy and forced Parliament to choose a successor. It also marked the clearest political outcome of the 2022 protest wave: a sitting president removed by public pressure and institutional process.
On July 20, 2022, Parliament elected Ranil Wickremesinghe to complete the remainder of the term after Rajapaksa’s resignation. The vote shifted the crisis from street-driven leadership change to a parliamentary transition. However, public opposition remained strong because many protesters viewed the new leadership as continuity rather than reform.
On September 1, 2022, the IMF announced a staff-level agreement with Sri Lanka on a 48-month Extended Fund Facility (EFF), with financing around US$2.9 billion. The IMF emphasized that debt relief from creditors and policy reforms (including tax changes and cost-reflective fuel and electricity pricing) were needed before IMF funds could be disbursed. This set a formal roadmap linking economic stabilization to governance and fiscal reforms.
On March 20, 2023, the IMF Executive Board approved a 48-month EFF arrangement for Sri Lanka of SDR 2.286 billion (about US$3 billion), enabling an immediate disbursement. Approval signaled that Sri Lanka had taken key steps on reforms and financing assurances, even as the social impact remained severe. The program made IMF monitoring central to Sri Lanka’s recovery strategy.
On July 1, 2023, Sri Lanka’s Parliament passed a “Domestic Debt Optimization” (DDO) strategy, a form of local debt restructuring aimed at meeting debt-sustainability targets while protecting the banking system. This complemented talks on external debt and was part of the conditions needed to keep IMF-supported reforms on track. The move showed the crisis shifting from protests and leadership collapse toward difficult technical fixes in public finance.
On September 1, 2023, Sri Lanka suspended the QR code-based fuel rationing system that had been introduced during the worst fuel shortages. Ending rationing reflected improved supply management compared with 2022’s long queues and shutdowns. It also illustrated a visible, everyday sign that the emergency phase of the crisis had eased, even though economic pain continued.
In October 2023, Sri Lanka announced an agreement with China’s Export-Import Bank on restructuring part of its debt, a key step toward broader creditor coordination. Progress with major creditors mattered because the IMF required “financing assurances” that debt would be made sustainable. The deal reflected how geopolitics and creditor negotiations became central to the post-protest phase of the crisis.
In June 2024, Sri Lanka reached a restructuring agreement with an official creditor committee of nations, covering billions in bilateral claims. The agreement was designed to reduce near-term payment pressure and support the IMF program’s debt-sustainability requirements. This milestone showed the crisis moving toward a negotiated settlement rather than emergency politics.
On November 25, 2024, Sri Lanka launched new securities as part of a swap to restructure defaulted international sovereign bonds. The proposal aimed to end the external default that began during the 2022 crisis, and it relied on high participation from bondholders. This step linked Sri Lanka’s return to market credibility with longer-term reform and debt limits.
On December 20, 2024, Sri Lanka finalized its international sovereign bond restructuring through a mandatory exchange that reached very high participation. Completing the exchange marked a concrete outcome of the 2022–2023 crisis cycle: from shortages and mass protests to a negotiated debt workout under IMF oversight. While not ending economic hardship, it represented a formal step toward restoring debt sustainability and moving beyond the default triggered in 2022.
2022 economic crisis, mass protests and political change (2022-2023)