About 60% of developing countries are facing the debt crisis in a disastrous form. After Sri Lanka’s default, eyes are now on Pakistan, Tunisia, Ghana, Kenya and El Salvador.
The International Monetary Fund said that about 60% of the world’s developing countries are facing the debt crisis in a disastrous form. All economic experts agree. Sri Lanka has already defaulted. Today, the eyes of experts are on Pakistan, Tunisia, Ghana, Kenya and El Salvador. The foreign exchange crisis facing Pakistan is becoming more and more serious. Tunisia is struggling to meet its budgetary needs. Ghana and Kenya are heavily indebted. El Salvador bonds are about to mature. Well, Argentina is in trouble too. It has yet to recover from the effects of the 2018 currency crisis. It is therefore clear that due to the continued strengthening of the US dollar, problems have increased in many countries around the world. The dollar appreciated abnormally against almost all currencies in the world. The American people may benefit, but the economies of many countries have faltered.
The reason is that more than half of global business is still done in dollars. Apart from this, most countries borrow in dollars from the international market. Now, due to the cost of money, 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 heavy burden of foreign dollar debt. It has become more difficult for these countries to repay debt and interest. On the other hand, there has been a significant outflow of capital from these countries. International investors now prefer to invest in dollars. So they pulled their money out of the developing economy. Due to this, the value of currencies of different countries has fallen. This will result in a decline in GDP. Countries will not be able to import according to the requirement. Its effect will be felt on production within the country. It seems to be happening in many countries now.
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