Sri Lanka’s crisis rings alarm for other troubled economies

Colombo, July 6 (BNA): Sri Lanka is in dire need of help to overcome the worst crisis in recent memory.

Its schools are closed due to a lack of fuel to transport children and teachers to classrooms. The Associated Press reports that its efforts to arrange a rescue plan from the International Monetary Fund have been hampered by the severity of the financial crisis.

But it’s not the only economy in serious trouble as the prices of food, fuel and other basic commodities have skyrocketed with the wars in Russia and Ukraine. Alarm bells are ringing for many economies around the world, from Laos and Pakistan to Venezuela and Guinea.

About 1.6 billion people in 94 countries face at least one dimension of the food, energy and financial systems crisis, and about 1.2 billion of them live in “perfect storm” countries, highly vulnerable to the cost of living crisis as well as others. Long-term pressures, according to a report released last month by the United Nations Secretary-General’s Global Crisis Response Group.

The exact causes of their problems vary, but they all share the growing risk of soaring food and fuel costs, pushed up by the war, and that have taken a hit just as the disruptions to tourism and other business from the coronavirus pandemic fade. As a result, the World Bank estimates that per capita income in developing economies will be 5% below pre-pandemic levels this year.

Economic pressures are fueling protests in many countries, meanwhile, short-term borrowing and high interest to help fund pandemic relief packages has left countries already struggling to meet their repayment obligations piling more debt. According to the United Nations, more than half of the world’s poorest countries are in debt distress or at high risk.

Some of the worst crises occur in countries already devastated by corruption, civil war, coups, or other disasters. They are confused, but with an undue burden of suffering.

FKN