Russia’s war in Ukraine has brought several heavily indebted developing countries to the brink of a debt crisis
The war in Ukraine is making it harder for the governments of many developing countries to pay off their debt to foreign creditors, fueling concerns of potential crises that could shake markets and weaken the global economic recovery.
Russia’s invasion of its neighbor and the West’s sanctions sent food, energy, and other prices soaring at a time when many major central banks are raising interest rates to tame inflation. As a result, from Islamabad to Cairo to Buenos Aires, government officials are struggling with rising import prices and debt bills. In April 2022, Sri Lanka has already defaulted on its debt and now is mired in a widening political crisis.
“There is going to be a default. There are going to be crises. When we are hit by shocks like this, anything is possible,” Kenneth Rogoff, a Harvard University economist.