Applying Reinhart and Rogoff’s framework to the Sri Lankan economic crisis: identifying parallels and divergences

Purpose The economic quagmire Sri Lanka was engulfed in, due to COVID and the subsequent political instability within the country, led to a severe economic turbulence that trembled the economic foundations of Sri Lanka during the year 2022. This is an exceptional crisis. Hence, the purpose of this article is to ascertain the antecedents for the crisis and to apply the crisis to Reinhart and Rogoff's framework discussing the inflation, currency crisis, debt and the “it's different this time” syndrome, to identify the parallels and divergences. Design/methodology/approach The study was conducted based on content analysis, document analysis and document review methodology under the qualitative research approach. The study was underpinned by the Minsky theory and the “it's different this time” syndrome. Findings The study with the given magnitude of the economic crisis, reveals there are more dissimilarities than similarities compared to Reinhart and Rogoff's framework. Findings exposed the haphazard and discretionary monetary policy of the authorities with significant deviations from the macroeconomic fundamentals. Practical implications Several practical implications are highlighted in multiple dimensions towards policy makers, economists, the Central Bank and the importance of evaluating the feasibility and viability of internal and external debt. This is the first analysis of this nature on the Sri Lankan economic crisis. Originality/value The study provides an emerging framework that goes beyond Reinhart and Rogoff framework. The study which was purely focused on the Sri Lankan economic crisis, highlights the theoretical and practical implications.