Missing the Global Money Shift? Uncover 10 Nations Grappling with Looming Economic Wildfires

Countries from all over the world have faced economic ups and downs through the years. A country can face financial struggles due to internal or external factors. When a country is in a financial crisis, asset prices decline, the debt of businesses and consumers increases, and financial institutions also experience liquidity shortages. Countries worldwide can face financial issues anytime, especially if financial mishandling persists. These are ten countries that are struggling to keep their financial flames alight this year:

Ukraine 

In the wake of Russia’s invasion, Ukraine has suspended debt payments. In addition, Prime Minister Denys Shmyhal is looking to clinch a $15 billion, multi-year International Monetary Fund program. The country has faced a lot of hardships and is looking to find ways to ensure that people can continue their daily lives. The country’s financial stability continues to be at risk, with a long way to go before they can completely stabilize their economy.

Pakistan 

Pakistan saw one of the worst natural disasters in the country’s history, with floods that were so devastating they left the country and its citizens struggling to pay for essential goods. The floods have severely affected the country’s economy, which may be at risk of defaulting. The country’s debt-to-GDP ratio rose to a dangerous zone of 70%, which may not help improve the country’s financial situation. Up to half of the country’s revenues have already been put aside for interest payments, which does not leave much for other use.

Lebanon 

Multiple decades of economic mismanagement and corruption led Lebanon to witness a financial unraveling in 2019, which has since taken a turn for the worse. Lebanon faced a government crisis for a long time, where the country needed a head of state or an empowered cabinet. The country has seen little stability in the government, as well as in its economy, ever since its independence. For the financial situation to improve, multiple economic reforms and overhauls in the banking and exchange rate systems must be undergone.

Sri Lanka

Sri Lanka, for the first time in many years, is also facing financial struggles. The country defaulted on its international debt owing to the severe economic mismanagement that has been going on for several years. When the pandemic hit, the financial struggles turned into an economic crisis. Social unrest in the country grew, resulting in the president fleeing. The new government in the country has reached provincial agreements for a multi-billion-dollar support program, which is yet to be finalized.

Tunisia 

Tunisia has a relatively more minor economy than other countries on this list. However, the country is going through one of its worst economic crises. The financial crisis in the country has led to a shortage of essential food items, which has led to the country looking for an IMF loan of $1.9 billion. The loan was applied for in return for unpopular reforms that included cutting food and energy subsidies. Analysts expect that the country will be able to overturn the financial situation of the country.

Ghana 

Ghana saw a significant increase in its debt-to-GDP ratio recently, which has led to different kinds of financial struggles for the country. The country had to spend nearly half of its government revenues on debt interest payments alone, which further led the country to be the fourth to see a rework under the Common Framework. The country’s financial situation requires a lot of restructuring to improve the situation. Ghana was able to secure a $3 billion agreement that was contingent on a successful restructuring of debts.

Zambia 

Zambia was among the first African countries to default when the pandemic hit. It became a test country for an initiative to help accelerate and streamline debt restructurings. However, the country’s $13 billion debt rework has not progressed much. The delay in the debt restructuring has led to multiple problems for the country, one of which saw an 8% fall in the country’s currency against the US dollar.

Egypt 

Egypt has seen an increase in prices for food and energy, which rose after the pandemic. The country also struggles to contain rising debt and its debt servicing burden. Egypt secured approval for a $3 billion support package from the IMF. The approval meant the country had to commit to a flexible currency and have a more significant role in the private sector. Since March of last year, the country has seen three sizeable devaluations that have weakened its currency by nearly half.

Malawi 

Yet another smaller country that has faced some economic hardships is the country of Malawi. The financial situation in the country is seeing a downturn due to the severe foreign exchange shortages it has experienced for a long time. These shortages led to constraints that affected importing essential commodities and inputs while lowering agricultural output. The country is looking to restructure its debt to secure IMF funding, which would approve emergency funds for the country.

El Salvador

El Salvador is the smallest country in Central America. In recent decades, the country saw modest economic growth in recent decade. However, although there is slow growth, there are many concerns regarding the economic situation in the country, especially concerns over its financing sources and fiscal policy. El Salvador also has a rising current account deficit, impacting its economy. The impact of the pandemic greatly affected the country’s GDP, resulting in low revenues and rigid expenditures, which increased public debt beyond 90% of GDP.

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