Main Stories

shadow of debt crisis

About 60 percent of the developing countries are facing the debt crisis in a dire form. After Sri Lanka’s default, the eyes are now on Pakistan, Tunisia, Ghana, Kenya and El Salvador.

The International Monetary Fund has said that about 60 percent of the developing countries of the world are facing the debt crisis in a dire form. All economic experts agree with this. Sri Lanka has already defaulted. Now the eyes of experts are on Pakistan, Tunisia, Ghana, Kenya and El Salvador. The foreign exchange crisis in front of Pakistan is becoming increasingly serious. Tunisia is finding it difficult to meet its budget requirements. Ghana and Kenya are heavily indebted. El Salvador’s bonds are about to mature. Well, Argentina is in trouble too. It is yet to recover from the effects of the 2018 currency crisis. So it is clear that due to the continuous strengthening of the US currency dollar, trouble has increased in many countries of the world. The dollar has risen abnormally against almost all the currencies of the world. The people of America may be benefiting from this, but the economies of many countries have staggered.

The reason is that more than half of the world’s business is still done in dollars. Apart from this, most countries take loans in dollars from the international market. Now due to the cost of dollars, they have to pay more money in the form of debt. On the other hand, due to the shortage of dollars, it has become difficult for them to import. Most developing countries have a high debt burden in dollars from abroad. It has become more difficult for those countries to repay the debt and interest. On the other hand, there has been a large amount of capital outflow from such countries. International investors are now preferring to invest in dollars. So they have taken their money out of the developing economy. Due to this the value of currencies of different countries has fallen. This will result in a fall in GDP. Countries will not be able to import as per the requirement. Its effect will be on the production within the country. This seems to be happening in many countries now.

Shubham Bangwal

Shubham Bangwal is a Senior Journalist at You can follow him on Twitter @sb_0fficial
Back to top button