Friday, 19 August, 2022

Bangladesh unfazed by default risk despite global economic austerity: Report

  • Sun Online Desk
  • 17th July, 2022 07:52:30 PM
  • Print news

Bangladesh is out of the risk of default although Sri Lanka and many other countries bear the brunt of the debt crisis.

Amid rising inflation, debt and cost of borrowing, more than 10 other countries are in danger of default.

Recently, Canadian news agency Visual Capitalist using data of Bloomberg published the names of 25 countries which are exposed to the default risk.  

As per the report, Sri Lanka is not the only country currently in default amid piling financial pressure. Other nations currently in default are Lebanon, Suriname, Zambia and Russia. Another on the brink of default is Belarus. But the list doesn’t stop there. Amid rising inflation, debt and cost of borrowing, a dozen other countries are in danger of default.

The vulnerable countries are as follows:

Argentina: The country is the sovereign default world record holder.  It looks likely to add to its tally of defaults a couple of years from now when it has substantial debt to service. Argentina’s currency reserves are critically low while the peso traders at nearly 50% discount in the black market.

Ukraine: Ukraine will almost certainly need to restructure its $20 billion plus of debt post Russia’s invasion. The country has $1.2 billion of bond payments due in September. However, the government may potentially ask for a two-year debt freeze. Nevertheless, Ukraine does have the potential to pay due to aid money and reserves.

Tunisia: Tunisia appears one of the most at risk among a bunch of Africa countries going to the IMF.  It has a near 10% budget deficit and one of the highest public sector wage bills in the world. The country is on Morgan Stanley`s top three list of likely defaulters.

Ghana: Ghana has borrowed intensely, stemming a debt-to-GDP spike to nearly 85%. Its currency has lost almost a quarter of its value this year. Ghana was already spending more than half of its tax revenues on payments of dues. Inflation in the African nation is nearing 30%.

Egypt: Having witnessed one of the biggest exoduses of international cash this year at around $11 billion, Egypt has a near 95% debt-to-GDP ratio according to JPMorgan. It is estimated that Egypt has $100 billion of hard currency debt to pay over the next five years.

Kenya: Kenya spends roughly 30% of revenues on interest payments. Its bonds have lost almost half their value and it currently has no access to capital markets - a problem with a $2 billion dollar bond coming due in 2024.

Ethiopia: The country servicing a sole $1 billion international is trying to be among the first to get debt relief under the G20 Common Framework programme. However, its ongoing civil war has been a hurdle in Ethiopia’s plans.

El Salvador: El Salvador locked itself out of IMF’s shelter by making bitcoin legal tender.

Pakistan: Neighbouring country made a crucial deal with the IMF earlier in the week. Pakistan is on the brink of a payments crisis. Its foreign currency reserves have plunged to $9.8 billion, hardly enough for five weeks of imports, while the Pakistani rupee touched record lows.

Belarus: Russia’s ally Belarus is seemingly heading to the same fate of last month’s default amid West sanctions over the Ukraine conflict.

Ecuador: It defaulted two years ago. But it is against seeing protests and crisis brewing as people try to oust the president.