First of all , let us assume that someone has 1000 rupees at his disposal and he has to spend 2000 rupees then how will that person spend the extra amount obviously he will have to borrow the extra 1000 rupees from other person but what will he do if his financial condition is too bad and he is not in a condition to repay the loan at the promised time in that situation he will be forced to offer some property to the lender such a situation is called bankruptcy. This situation is not only faced by people but also by the country and one of them is Sri Lanka the neighbouring country of india is on the situation of bankruptcy. They facing a financial crisis and it is pleading for assistance from countries like china and India . Now, we will discuss what has caused Sri Lanka to the situation of bankruptcy. Sri Lankan debt had started increasing in2007 when then Sri Lanka governments started borrowing loans for constructing hambantota port and the government took several loans between 2007 and 2016 and all these loans were borrowed from EXIM bank of China. However, Sri Lanka financial crisis is not only limited to the loans borrowed from the China’s banks apart from China Sri Lanka is also financially overburden with loans borrowed from Asian development Bank, international financial market Japan and India the major share of Sri Lanka’s foreign debt was in form of sovereign bonds which made 39 of its total foreign debt in 2017. Foreign investment in Sri Lanka was also declining and Sri Lanka had to hand hambantota port to China to boost it’s foreign reserves but even the decision of handling the port to China and the resultant slight and momentary boost in foreign reserves didn’t help in reducing Sri Lanka’s debts. The thing is that Sri Lanka governments kept taking foreign loans to improve the countries infrastructure but didn’t get the significant of the investment made in the countries infrastructure as a result now how it is left with no money to repay those debt loans. In September 2021 it was in news that were was a shortage of food items in sri Lanka there were long queues for essential items like sugar,rice, pulses and milka powder.it implies that inflation in sri lanka is at its peek . Actually, the countries foreign exchange reserves are running out rapidly when foreign exchange reserves of a country runs out thenthe country can’t import goods from foreign countries. In 2020, Sri lankan currency dealling under immense pressure. The situation has become so critical that the Sri Lanka banks have urged the citizens to deposit the foreign currency in their position in the banks and to exchange it with Sri Lankan currency. Sri Lanka invested heavily in improving it’s tourist. The current Sri Lankan economic crisis is due to the historical imbalance in the economic structure, misguided policies of rulers. Now, the Sri Lankan economy has been facing a crisis in Balance of payment problem. People of Sri Lanka suffering from food shortages and petrol etc. Moreover, Sri Lanka parliamentary speaker sit on Saturday 2022 and speaker say president Gotabaya Rajapaksa to step down on July 13,2022. Sri Lankan protesters occupy the president house and violence the president house to resign .