The debt crisis for developing countries is not a new phenomenon. For decades, debt repayment has necessitated the transfer of money from developing nations in the global South to developed ones in the North. The amount owed by developing countries to foreign creditors in 1989 was $1.3 trillion, which was well over half of their combined GDP and two-thirds of their export revenue. According to Debt Justice, a total of 54 countries are experiencing a debt crisis in recent times. The outbreak of the Covid-19 pandemic and the Ukraine war has seriously impacted the ability of developing countries to repay their debts. It is pretty much evident in Sri Lanka which has announced itself as a defaulter due to its inability to repay the debt for the first time in its 70 years of independence. The Asian Development Bank has identified Sri Lanka as “a tale of two deficits” which indicates Sri Lankan trade and budget deficits are caused by over-reliance on imports and development projects. The due debts are a certain way to plunge a country into an economic crisis which eventually turns into political turmoil, which Sri Lanka has faced and continues to face.
– Muhammad Estiak Hussain, Research Intern, The KRF Center for Bangladesh and Global Affairs (CBGA).