AP News reported on July 7 that apart from Sri Lanka being the only country that has recently declared bankruptcy, there are still other economies which are in dire distress or at their greatest peril.
Those countries are Afghanistan, Argentina, Pakistan, Egypt, Laos, Myanmar, Turkey, Zimbabwe, and Lebanon.
All of them are suffering terribly from either one or more types of economic crises such as currency collapse, high inflation, low foreign exchange reserves, soaring fuel prices, food shortages and unemployment.
Even though each of the 9 mentioned countries face different tragedies, however, as reported by The Liberty Times, they still have one thing in common.
They all have already joined China’s Belt and Road Initiative, except for Afghanistan which has expressed desire to be a part of this plan but receiving no response.
In addition, according to the report, World Bank data shows that total debt repayment to be settled this year by the world’s poorest nations is 35 billion dollars, and 40% of which must be paid to China.
Based on this calculation, the media outlet states that the amount of debts owed to China is equivalent to 14 billion dollars and is very likely to become the regime’s bad debts. This figure has not yet included other hidden debts which are difficult to estimate.
In terms of economic crises, Lebanon seems to suffer the most. In June 2021, the World Bank ranked the country as one of the worst that the world has seen in more than 150 years by having its currency’s value lost by nearly 90%. At the time of the default in March 2020, Lebanon’s debt reached over 90 billion dollars, or 170% of its GDP, one of the highest in the world.
Zimbabwe has the highest inflation among all, with more than 130%. It raises great concerns that the country could return to its 2008 hyperinflation that was up to 500 billion percent.
Myanmar, after the army seized power in 2021 which caused Western to impose sanctions on commercial holdings under control of the army. Its economy contracted by 18% last year and is predicted to hardly grow this year. The country’s situation is so uncertain that it makes the World Bank exclude its forecasts for Myanmar for 2022-2024.
Argentina’s foreign exchange reserves are dangerously low due to weakened currency. About 4 out of 10 Argentines are poor, the inflation of this year is forecast to be over 70%. Moreover, the nation has recently made a deal with the IMF to restructure 44 billion dollars in debt.
As of April 2022, the World Bank’s latest assessment about Pakistan stated, “Macroeconomic risks are strongly tilted to the downside.” Pakistan’s foreign exchange reserves have dropped to 13.5 billion dollars, equivalent to just 2 months of imports.
Similarly, Laos, one of the most rapidly growing economies before the pandemic, has foreign reserves of less than 2 months of imports. Like Sri Lanka, it is in negotiation with lenders about how to repay over a billion of dollars worth of debts.
Egypt has nearly one-third of 103 million people living in poverty, and foreign reserves continue to fall. Its neighbors Qatar, Saudi Arabia and the United Arab Emirates have pledged to support 22 billion dollars in deposits and direct investments.
Afghanistan, since the Taliban took control of the entire country, about half of its 39 million people endure life-threatening levels of food shortage, and civil servants have not received wages for months. On top of that, the U.S. has also frozen 7 billion dollars of its foreign reserves in the United States.
Turkey is suffering from high and soaring debts, plus an inflation rate of more than 60%. Foreign debt is around 54% of its GDP, an unsustainable level as government debt is high.