{"id":66815,"date":"2025-09-16T03:50:11","date_gmt":"2025-09-16T03:50:11","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/66815\/"},"modified":"2025-09-16T03:50:11","modified_gmt":"2025-09-16T03:50:11","slug":"covid-to-conflict-spurring-up-debt-and-political-crisis-in-global-south","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/66815\/","title":{"rendered":"Covid to conflict spurring up debt and political crisis in Global South"},"content":{"rendered":"

New Delhi:<\/strong> Last week\u2019s \u2018Gen Z\u2019 protests that led to the fall of the KP Sharma Oli government in next door Nepal, though shocking, brings a sense of deja vu of a story seen in the region before. Of an economic crisis, fuelling a political crisis, with the fall of governments, led by a sudden \u201cground\u201d movement, with protestors marching into key government buildings. In the case of Nepal, it was the burning down of the Parliament and key government buildings, in the case of Sri Lanka, pictures of protesters in the president\u2019s swimming pool, and similar pictures seen from Pakistan to Bangladesh in the past few years.<\/p>\n

The sudden economic crisis seen in many parts of the world, and in India\u2019s neighbourhood in many ways, has its origin in the start of the COVID pandemic in 2019\/2020. But while the world was recovering from the economic fallout of COVID, the war in Ukraine starting in 2022, and thereafter the West Asia crisis escalating after the Hamas terror attack in Israel in 2023 meant the worst was yet to come. The worst hit by the economic crisis were countries in the global south, as crisis became a norm rather than an exception.<\/p>\n

Sri Lanka (2022)<\/p>\n

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Sri Lanka, in India\u2019s neighbourhood, was the first to be hit by the economic crisis with debt exceeding 100% of GDP and depleted foreign reserves, triggering 70% inflation and the Aragalaya protests. The crisis, worsened by mismanagement, and COVID-19\u2019s impact on tourism, led to shortages of essentials like fuel and food. The government secured a $3 billion IMF bailout, implementing austerity measures, including steep VAT hikes, to stabilise the economy. India\u2019s role was key, with support exceeding over $4 billion in financial and humanitarian assistance, more than the IMF bailout package.<\/p>\n

Pakistan (2022\u201324)<\/p>\n

Pakistan was hit by massive floods in 2022, causing economic losses of $30 billion. Imran Khan\u2019s government struggled with a deteriorating economy, including record inflation (reaching 18% for essentials like fuel and food by late 2021), a 30% depreciation of the Pakistani rupee against the US dollar, and debt to 90% of GDP. Khan\u2019s government was out soon, as Islamabad sought a $7 billion bailout from the IMF.<\/p>\n

Bangladesh (2023\u201325)<\/p>\n

Bangladesh\u2019s foreign exchange reserves, a critical buffer against external shocks, plummeted due to high import costs, reduced remittances, and capital outflows. At their peak in August 2021, reserves reached $48.06 billion, providing ample coverage for imports. However, by the end of 2023, they had fallen sharply to around $21.86 billion. August 2024 saw widespread protests leading to the fall of Sheikh Hasina government.<\/p>\n

Nepal (2025)<\/p>\n

In Nepal too, there is a similar story of the fall of economic or GDP numbers, remittances falling, and a surge in inflation. The economic malaise provided fertile ground for social discontent, erupting into the year\u2019s defining political event, one that dominated global headlines this month.<\/p>\n

The stories from India\u2019s neighbourhood are similar to the economic crisis faced by Greece from 2010-2015, Argentina in 2001\/2018, and in Zambia in 2020-21. Debt crisis, austerity measures, inflation, IMF loans, and a political crisis leading to the toppling of governments. In fact, Zambia was the first African sovereign default in Covid pandemic era. But in a world where jumping from one crisis to another has been happening regularly, the next major worry is expected to be Trump\u2019s tariffs, which are seen destabilizing the global markets and questioning the global political and economic order established since the end of World War 2.<\/p>\n

Crystal gazing India<\/p>\n

India has also faced similar headwinds, including its share of protests, but what has helped the 4th largest economy is its economic size, institutional depth, democratic safety valve, and stable political climate. The economic shield has been foreign exchange reserves worth over $700 billion, fiscal deficit, tightly managed at around 4.8% of GDP, sustained capital spending growth and GST and digital-tax reforms yields of over \u20b922 lakh crore annually. With GDP growth averaging 7%, India maintains moderate external debt, avoiding IMF assistance since 1993.<\/p>\n

A guarantee on economic stability is not by destiny, but by design. Trump\u2019s tariffs on India, which now cover over $48 billion worth of Indian exports, means focus is now on diversification. Also, as the old saying goes, every crisis is also an opportunity. For India, it\u2019s the mantra of self-reliance and the most populated country has examples from the past: Japan in the 1970s turning to high tech industries amid trade tensions with the US, South Korea in 1997 turning to exports, and China in 2018 making its own technologies amid US tariffs.<\/p>\n","protected":false},"excerpt":{"rendered":"New Delhi: Last week\u2019s \u2018Gen Z\u2019 protests that led to the fall of the KP Sharma Oli government…\n","protected":false},"author":2,"featured_media":66816,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[174],"tags":[79,11021,46779,179,18,8948,19,17,46372],"class_list":{"0":"post-66815","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-conflict","10":"tag-covid-pandemic","11":"tag-economy","12":"tag-eire","13":"tag-global-south","14":"tag-ie","15":"tag-ireland","16":"tag-political-crisis"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/66815","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=66815"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/66815\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/66816"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=66815"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=66815"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=66815"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}