Around seven developing countries are at risk of bankruptcy or in need of bailouts due to escalating debt levels approaching default. Bankruptcy can occur when a government’s debt becomes unmanageable, leading to significant unpaid obligations.
In 2022, Achim Steiner, head of the UN Development Programme, cautioned that over 50 of the poorest developing nations could default on their debts and face near-bankruptcy without external support. The following countries are either already bankrupt or require bailouts to prevent loan defaults:
Pakistan’s economic crisis began with the political unrest of 2022, which saw Prime Minister Imran Khan ousted. Currently, over 60% of the country’s tax revenue is directed towards debt repayment. The GDP has decreased from $375.44 billion in 2022 to $374.90 billion in 2023-24, while inflation remains high at 9.6% as of August 2024.
ALSO READ: Police Investigate 1,000-Member Same-Sex Network Operating in Harare
In September 2024, creditors including China and India agreed to restructure their loans, granting Sri Lanka more time to repay. Additionally, the International Monetary Fund (IMF) has offered Sri Lanka $3 billion, along with a $600 million loan from the World Bank.
Bangladesh is experiencing a decline in foreign exchange reserves, which fell from $32 billion in January 2023 to $20 billion by September 2024, partly due to the Central Bank’s efforts to devalue the Taka. The national debt currently stands at $154 billion, with the country defaulting since 2017. Its GDP has plummeted from $372.59 billion in 2012 to $102.33 billion in 2024, and approximately 82% of the population lives in poverty.
