While the war in Ukraine rages on, the world has been beset with other crises too.
There is the global uncertainty about food supplies, a condition created by supply chain disruptions, no doubt. Of course this can be historically related to the Covid-19 epidemic and its aftermath.
Cuts in jobs and underemployment, working from home and the move to a more digitalized world- all these are very much in the forefront of social development in the present times.
Inflation too is at its peak in many marginalized and resource-poor nations.
A New Crisis
However, there is another crisis in the making- an economic and financial crisis. Its effects can already be seen in Sri Lanka.
However, if Western leaders looked at the larger picture, they would realize that it is a common problem that is being experienced in most Third world countries, and other impoverished nations across the globe.
It is a bomb waiting to explode, and its effects can be very catastrophic indeed.
The Reasons for the Crisis
If you truly analyzed the reasons why Sri Lanka is at the crossroads of an economic meltdown today, you would come to the conclusion that there are a multitude of factors that have played their role in exacerbating the poor situation in which Sri Lanka finds itself at the present time.
Traditionally Sri Lanka has been a nation that is highly dependent on tourism to fuel its economy. With the Covid-19 crisis looming large, the country did not have many tourists visiting the archipelago.
There has also been rampant corruption and mismanagement at the governmental level. President Gotabye Rajapaskse and his family have been ruling the nation for the last 10 years or so.
Although they have been credited with bringing peace to the nation since 2009, after a rather brutal campaign to subdue the Tamil Tigers and other dissident groups in the nation, not much good can be said about the way they have handled the country’s economy.
The result is that there is rampant inflation in the prices of consumer goods, almost no foreign currency reserves, and no way to make payment for any imports the country might require.
There are power cuts and petrol is scarce. People are protesting en masse on the streets. The country has defaulted on its debts, and owes more than $50 billion to India, China and Japan.
Even the IMF is wary of lending to this nation, as it negotiates with a caretaker government.
This is quite starkly, an economic cul-de-sac from where there is no way out.
Why this Crisis Matters
The Sri Lankan fiasco can well portend the next global economic crisis.
Bloomberg reports that the debt securities of many Third World nations cannot be depended upon as a viable security. There is a risk of sovereign default.
A report made by UN experts has brought out the alarming statistic that at many as 1.7 billion people are under threat of facing shortages in food, fuel and financial insecurity.
In fact, this will affect about a fifth of global population living in the Third World. The economic experts need to get up and take notice.