12 emerging countries around the world are facing The risk of defaulting on its debts That exceeds $400 billion, according to traditional signs that warn of debt crises.
These signs are represented in the collapse of currencies, the decline in foreign exchange reserves, and the rise in the difference between the yields of these countries’ bonds and US bonds to regarding a thousand basis points.
It also holds the world record for sovereign debt default.
Currently, the Argentine peso is trading at a discount of nearly 50% on the black market, foreign reserves have fallen sharply and bonds are trading at just 20 cents to the dollar, less than half of what they were following the country’s debt restructuring in 2020. This is despite the fact that the government does not have Any significant debt to pay off until 2024.
Egypt is another country on the list, with high public debt levels equal to 95% of GDP and a strong foreign exchange outflow this year.
Egypt’s external debt is estimated at $160 billion maturing over the next five years, including a massive $3.3 billion bond maturing in 2024.
Note that half of these debts that Egypt needs to pay by 2027 are to the International Monetary Fund or bilateral debts, especially to the Gulf countries.
As for Tunisia, it faces the risk of faltering following the budget deficit approached 10% as the country faces one of the highest public sector wage bills in the world, and the difference in bond yields has increased by more than 2,800 basis points.
Moving to Ukraine, a number of investment banks such as Morgan Stanley and Amundi have warned that they will almost certainly be forced to restructure their debts exceeding $20 billion due to the war with Russia. The test will be in September, with a $1.2 billion payment due on its bonds due.
As for El Salvador, it closed the door to aid from the International Monetary Fund when it started using Bitcoin and confidence declined so that bonds maturing following 6 months were trading at a discount of 30% and the discount increased to 70% on longer-term bonds.
Ecuador, which stumbled two years ago, is back in the forefront with more than $40 billion in debt due to violent protests and the attempted ouster of President Guillermo Lasso.
JPMorgan raised its forecast for the fiscal deficit to 2.4% of GDP this year and 2.1% for next year.
Note that the differences in bond yields exceeded 1500 basis points.
The list of countries at risk includes Ethiopia, Pakistan, Ghana, Kenya, Belarus and Nigeria.
For his part, the economic expert, Muhammad Ramadan, said that a distinction must be made between countries and their importance in the global economy, adding: “Sri Lanka’s model did not receive international attention to intervene and propose a rescue plan.”
Ramadan added, in an interview with Al-Arabiya, that the global economy is facing two successive crises, the first of which is the Corona health crisis, which has significant economic repercussions, followed by the Russian-Ukrainian war.
Ramadan said, “The situation is very complicated…but I do not expect a major sovereign debt crisis because there will be interventions from the International Monetary Fund and other donor countries to support some countries of strategic importance.”
He pointed out that some countries that may suffer from a lack of economic growth will face bankruptcy and stumbling, with the lack of international support.
Ramadan believes that “a country like Lebanon is difficult to anticipate any solution in the medium term.”
As for Egypt, Ramadan said that the most important characteristic of the debt crisis in Egypt is that a large proportion of the external debt is in favor of the Gulf Cooperation Council countries, and another proportion is in favor of the International Monetary Fund.
