As South Asia grapples with a burgeoning debt crisis, a recent analysis highlights the dire situation faced by 118 developing countries, including Sri Lanka, Pakistan, and the Maldives. Sri Lanka, which defaulted on its external debt in April 2022, has engaged with the International Monetary Fund (IMF) 17 times, while Pakistan has done so 25 times. Currently, Sri Lanka's debt service stands at an alarming 202% of its revenue, compared to Pakistan's 189% and Bangladesh's 102%. The Maldives, with a debt of $3.1 billion, is also feeling the strain of these financial pressures. The crisis has been exacerbated by external factors such as rising interest rates in the US and EU, as well as the ongoing Ukraine-Russia conflict, which have further destabilized economies in the region.
Critics argue that the structural reforms imposed by the IMF and World Bank (WB) are counterproductive, leading to increased debt distress rather than alleviating it. In 2022 and 2023, both Nepal and Bangladesh sought assistance from the IMF, reflecting the widespread reliance on these financial institutions amid the crisis. The call for collective solutions has gained traction, emphasizing the need for accountability from the IMF and WB to ensure that the structural adjustments do not lead to further economic hardship for developing nations. As the situation continues to evolve, the need for a coordinated response to the debt crisis in South Asia has never been more urgent. [83ec1e17] [694cc436]