Over 107 countries including Ghana, South Africa, Egypt, Argentina are in the throes of imminent economic collapse due to the wave of financial crisis that has hit the world, a report has sounded the alarm.
25 of the countries are said to be in Africa, 25 in the Asia and 19 in Latin America as the Russia-Ukraine war continues to grind economies just two years after the ravages of the pandemic crisis distrupted global supply chain.
The report by India’s WION, a multinational English news channel broadcasting across Asia said about 107 countries are facing at least one of the three economic risks which include rising food prices, rising energy prices and tougher financial conditions.
It was also predicted that 69 countries may experience what has bedeviled Sri Lanka in recent times if the racing financial slide continues. Sri Lanka is in the middle of a searing economic meltdown as the Asian country had been bankrupted, with citizens unable to afford basic supplies including food and fuel to get by everyday.
According to the report, the combined population of 107 countries who are currently facing these risks amounts to a total of 1.7 billion people, a situation that could degenerate to the worst global economic crisis seen in a century.
For instance, the report noted that Egypt is facing serious complications with wheat importation as supplies have drastically reduced due to the ongoing war between Russia and Ukraine. Egypt is the world’s largest importer of wheat and the shortage in its supply has already triggered food crisis in the North African country, where citizens have a reputation for protests spreading like wildfire.
Likewise, Ghana’s debt level is said to be soaring, a development which has made the payments of interest to choke the economy with inflation rising above 27% — its 18-year high. Many analysts had predicted an imminent debt crisis for the West African country as its currency — Cedi– has lost 22% of its value against the American Dollar.
The New Diplomat reports that protesters have been pouring to the streets of Ghana in recent days to protest the rising cost of living and record inflation there, with some asking President Nana Akufo-Addo to step down.
Following the widespread protests, the officials of International Monetary Fund (IMF) are expected to arrive Tuesday in Accra to begin negotiations, in contrast to President Akufo-Addo’s previous stance on an IMF bailout. He often detests it, but now that seems to be the only plausible option before the Ghanaian leader as time is fast running out and citizens now have little or zero patience for rhetorics.
Also on the brink of facing serious financial crisis is Argentina. The South American country is experiencing hyper inflation which has begun to paralyse its economy as external debt has been mounting. Argentina is said to have defaulted on its debt repayments nine times following the damning situation.
In order to avoid a 10th default, the authorities have gone to the IMF to seek a $45 billion loan, according to reports. Analysts said while the loan may give Argentina a brief reprieve, it might not be able quell the civil unrest.
Similarly, Tunisia’s economy is said to be overheating foreign debt accounts by 100% of its GDP. The trade deficit has widened to $800 million while inflation stands at 7%, fuel prices at record highs.
The report hinted that hyper-inflation and high unemployment rate have dire consequences for South Africa, Africa’s most industrialised economy. This week, South Africans who had taken to the social media voiced concerns over looming economic meltdown in the rainbow nation as the cost of energy continues to spiral.
In Nigeria, the government on Monday expressed grave concerns on the calls for it to remove fuel subsidies amid the ongoing global oil rally. The government admitted the removal is likely to spark civil unrest in Africa’s largest population and economy, where angry citizens are already gearing up for next year’s general elections, The New Diplomat had earlier reported.
“When you consider the chaos, the social disharmony and instability such an action of abolishing subsidies would facilitate, is it worth it? I don’t think so,” Nigeria’s Minister of Information and Culture, Lai Mohammed told Reuters without sugar-coating his response.
Checks reveal Nigeria’s food inflation rose to 19.5% last month, as ongoing act of banditry, widespread mass killings and rampant kidnappings have continued to push farmers away from agrarian communities. This is said to be a twin tragedy for the country in that food importation had again been hampered by the bloody hostilities in Europe, leaving millions of Nigerians in dire strait, with telling political implications.
The text of the report as broadcasted by India’s WION reads: “In March, the United Nations released this report it said there were 107 economies that face at least one of the three risks. Number one, rising food prices, number two rising energy prices and three tougher financial conditions.
“107 countries face these risks. Together, they represent 1.7 billion people that’s more than 1/5 of humanity. There are 69 countries that face all the three risks; food, energy, finance, all three. 69 countries could go the Sri Lanka way. 25 in Africa, 25 in the Asia Pacific and 19 in Latin America.
“Which countries are these? We’ll start with Egypt, the land of pharaohs. It is in the throes of a financial crisis. Egypt is the world’s largest importer of wheat, Russia and Ukraine where it stopped suppliers as they fight now the supplies are running out. Last month, Egypt said that its wheat reserves will not last more than three months.
“Next, we have Tunisia, the birthplace of the Arab Spring. Its economy is overheating foreign debt accounts for 100% of its GDP. The trade deficit has widened to $800 million. Inflation stands at 7%, fuel prices at record highs. Experts say Tunisia could soon face civil unrest. The same warning has been issued for Lebanon, the Switzerland of West Asia will not anymore.
“In 2020, the Beirut blasts destroyed Lebanon’s largest grain stores. Food prices went up by 11 times. The Lebanese pound lost 90% of its value. Public debt grew to 360% of the GDP. The war in Ukraine complicated things further, Lebanon imported 80% of its wheat from Ukraine, those supplies have fallen, there’s a bread shortage, a scarcity of sunflower oil. Lebanon has been forced to take a $150 million loan from the World Bank to ensure food security.
“Then we have Argentina, the land of tango also caught on the wrong foot. Now inflation is paralysing its economy external debt is mounting. Argentina has defaulted on debt repayments nine times to avoid a 10th default it has gone to the IMF. It wants to refinance a $45 billion loan. It may give Argentina a brief reprieve, but it will not quell the civil unrest. Analysts say Argentina is staring at a long and cold winter this year. Some other Latin American countries are also at risk like El Salvador and Peru.
“They face hyperinflation and commodities tumbling bonds, food shortages, detonating prices and mass unemployment, very much like Sri Lanka. Reports says both countries could soon face civil unrest. In Sub Saharan Africa, Ghana, Kenya, South Africa, Ethiopia could be the worst hit.
“In Ghana, debt levels are soaring interest payments are choking the economy a debt crisis looks imminent. In Kenya, the debt has climbed to $70 billion, that’s 70% of its GDP. Last week, they got a $244 million loan from the IMF to weather this economic storm. In South Africa the debt has reached 80% of its GDP, there’s a looming threat of state collapse, a rerun of the 2021 civil unrest.
“Next comes Turkey the currency is sliding the debt is soaring upwards of 54% of the GDP. Inflation has touched 70% GDP forecast got to 3.3%. There’s a food shortage Turkey is getting 50,000 tonnes of wheat from India. And these are just a few examples.
“The World Bank says that in the next 12 months, as many as a dozen developing economies may not be able to service their debt. This will be the largest debt crisis in a generation. What about India, it will feel the impact. A few state economies are already inching towards a debt crisis in Punjab, West Bengal, Bihar and Uttar Pradesh the debt to GDP ratio is identical to Sri Lanka’s.
“On the third of April, Indian bureaucrats expressed concern they said populist measures in these states could ruin their economies and leave them broke like Sri Lanka. Now here’s the thing the entire world is in debt distress, national budgets are a breaking point. Some governments are being forced to cut spending others are borrowing more to stay afloat. What can we do to stop this? How can the world prevent a debt typhoon”