Sri Lanka is the first domino to fall in the face of a global debt crisis

Weeks of unrest in Sri Lanka forced the resignation of the prime minister, Mahinda Rajapaksa, as the country reels from the pandemic, costly debt and rising food and fuel prices. Photograph: Eranga Jayawardena/AP

The departure of Sri Lanka’s prime minister, Mahinda Rajapaksa, follows weeks of protest and a deepening crisis. There is no bankruptcy system for states but if there was then the south Asian country – down to its last $50m (£40m) of reserves – would be first in line to use it.

A team from the International Monetary Fund (IMF) this week started work with officials in Colombo over a bailout that will include a tough package of reforms as well as financial support. But as the IMF and its sister organisation, the World Bank, know full well, this is about more than the mismanagement of an individual country. They fear Sri Lanka is the canary in the coalmine.