Sri Lanka crisis is a warning to other Asian nations

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The head of the International Monetary Fund said that other countries could be at risk of similar troubles because of the economic crisis in SriLanka.

There will be more strains on countries with high debt levels. Kristalina Georgieva, the Managing Director of the International Monetary Fund, said on Saturday that Sri Lankans should look no further than that.

Developing nations have been experiencing sustained capital outflows for four months in a row, putting their hopes of catching up with advanced economies at risk.

As it battles a foreign exchange crisis, Sri Lanka is struggling to pay for essential imports such as food, fuel and medicine. Food prices are 80% more expensive than a year ago. The rupee has fallen against the US dollar and other major global currencies.

The economy was ruined by Gotabaya Rajapaksa's disastrous policies, which were only worsened by the swine flu.

Last month, Sri Lanka became the first country in the Asia Pacific region in 20 years to default on foreign debt.

The International Monetary Fund had been in talks with officials for a multi-billion dollar rescue. The talks are not going well.

Other economies in the region are affected by rising inflation and interest rate hikes as well as high levels of debt and dwindling foreign currency reserves.

China has been a dominant lender to several of the developing nations and could have a big say in their future. It's not clear what Beijing's lending conditions have been, or how they may be restructured.

China is at fault because it encourages and supports expensive infrastructure projects that have not produced major economic returns.

Their active political support for the ruling Rajapaksa family and its policies are at the heart of Sri Lanka's economic collapse, and until they are repaired through constitutional change and a more democratic political culture, the country is unlikely to escape its current nightmare.

It's worrying that other countries are on the same path.

The East Asian nation of more than 7 million people is at risk of default on its foreign loans.

The cost of food in a country with a third of the population living in poverty has gone up because of a rise in oil prices.

Some people have been unable to pay their bills because of long lines for fuel.

The Lao kip is down by more than a third against the US dollar.

Increased interest rates in the US have strengthened the dollar and made imports more expensive.

Lao people are struggling to repay loans or pay for imports like fuel. The country had over a billion dollars in reserves by the end of last year.

About half of the country's total domestic revenue will be lost by the year 2025.

Last month, Moody's Investor Services lowered the communist-ruled nation's rating to "junk" grade, a category in which debt is considered high risk.

A hydropower plant and a railway are two big projects that have been funded by loans from China. Beijing has undertaken 813 projects worth more than $16 billion last year, according to Laotian officials.

According to the World Bank, Laos' public debt amounted to almost all of its GDP in 2021.

The Lao People's Revolutionary Party has held power in the country since 1975, and experts say it has been mismanagement.

"Laos has a fighting chance of avoiding the danger zone and the need for a bail out", said an economist in a recent report.

Since the end of May, fuel prices in Pakistan have gone up by around 90 percent. As it negotiates with the International Monetary Fund, it is trying to cut spending.

The cost of goods is increasing. The annual inflation rate hit a 13 year high in June.

Pakistan's foreign currency reserves have almost halved in the last year.

One of the key demands of the International Monetary Fund is the reduction of the gap between government revenue and spending.

According to Andrew Wood, an analyst at S&P Global Ratings, Saudi Arabia and the United Arab Emirates could be willing to extend credit if the funds are unlocked.

The faltering economy is not the only reason for the ousting of the former prime minister.

Pakistan is said to owe Beijing more than a quarter of its debt.

"Pakistan appears to have renewed a commercial loan facility vis-a-vis China and this has added to its foreign exchange reserves and there are indications they will reach out to China for the second half of this year."

TheMaldives has seen its public debt swell in the last few years and it's now above its GDP.

The economy was dependent on tourism and was hammered by the Pandemic.

The island nation is particularly vulnerable to higher fuel costs because its economy is not diversified, according to the World bank.

The holiday destination is at risk of default by the end of the year, according to a report.

Inflation in Bangladesh reached 7.42% in May, its highest level in eight years.

With reserves dwindling, the government has acted fast to curb non- essential imports, relax rules to attract migrants and reduce foreign trips for officials.

Bangladesh, Pakistan and Sri Lanka have current account deficits. According to Kim Eng Tan, an analyst at S&P Global Ratings, Pakistan and SriLankan have turned to the International Monetary Fund for financial assistance.

He said thatBangladesh has had to impose restrictions on consumer activities.

The world economy is threatened by rising food and energy costs. Developing nations that have borrowed a lot of money are finding that they are vulnerable to global shocks.