The US agency “Bloomberg” indicated that Egypt and Tunisia are among the countries that may default on their external debt against the backdrop of the global economic crisis and the consequences of the Ukrainian crisis.
The agency said a quarter-trillion-dollar bad debt threatens to drag the developing world into a historic series of defaults.
She explained that Sri Lanka was the first country to stop paying its bondholders this year, saddled with exorbitant food and fuel costs that fueled protests and political chaos.
In its report, the agency said that Egypt’s external debt is about $4 billion maturing in November 2022 and another $3 billion maturing in February 2023.
The report shows that attention is currently shifting to El Salvador, Ghana, Egypt, Tunisia and Pakistan, which are the countries most vulnerable to default.
The report cites warnings from several economists that these markets will collapse in light of the high cost of insuring emerging market debt against default risk to the highest level since the Russian military operation in Ukraine.
The agency said that as the war in Ukraine continues to put pressure on commodity prices, global interest rates rise and the US dollar strengthens, some countries are likely to bear an unbearable burden.
The report also referred to the debt crash in Latin America in the 1980s, while emerging market watchers say the current moment bears some resemblance to that crisis, and as it happened, the US Federal Reserve suddenly resorted to a rapid increase interest rates in an attempt to contain inflation, which leads to an increase in the value of the dollar and, thus, to difficulties in repaying the debts of developing countries to service their external bonds.
The report says that the crises of recent decades have always shown that the financial collapse of one government can create a “domino effect” known as contagion in the parlance of the markets, as erratic traders take money from countries with similar economic problems, hastening the collapse. their economies.
Source: US agency Bloomberg
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