Pakistan: The International Monetary Fund may have bailed Pakistan out of bankruptcy for now but the economy is in tatters.  A similar IMF bailout of $3 billion averted a default in 2023 but the country, mired in political crisis too, needed one more bailout this year. The latest $7 billion multi-year loan is a drop in the ocean considering that at least 60% of the tax revenue will go into repaying old debt. In May 2024, the IMF estimated that Pakistan will need at least $123 billion in external financing till 2029. The country’s GDP fell to $374.904 billion in 2023-24 from the $375.44 billion in 2022. Despite being on a downtrend, inflation stood at 9.6% in August. The pain on the population will only get worse before it gets better. The forex reserves are back above $10 billion, including a $1 billion tranche from IMF, for the first time since April 2022 but that’s won’t even cover three months of imports.

Sri Lanka: The island nation defaulted on its $83 billion debt in April 2022 as its forex reserves fell to just $50 million. The situation is now returning to normalcy. Forex reserves now stand at $5.95 billion, a three-year high. Inflation has fallen from 67% in September 2022 to just 1.1% in August 2024. The GDP, after falling from about $94 billion in 2017 to $84.4 billion in 2023, has grown between January and June 2024. The economy has been stablising after contracting 9.5% in 2022 and 2023. However, rising poverty and debt obligations can obstruct recovery. Sri Lanka defaulted on its debt two years ago. In September, the country reached a deal with creditors to restructure $12.5 billion debt. The lenders will take 27% haircut as part of the deal.

Bangladesh: The country’s total debt stands at $156 billion, a five-fold increase since 2008 and they are rated as “junk” by global rating agencies like S&P Global. The sovereign rating was downgraded even before the latest political crisis led to a regime change. As a result, the country’s forex reserves have fallen from $32 billion in January 2023 to $20 billion in September 2024. The central bank has devalued the Taka in the last few years, but that hasn’t helped so far. The Asian Development Bank expects inflation to rise to 10.1% in FY25, largely due to elevated food prices. There is also a fear of a run on the banks due to rising number of unpaid loans. While there is no debt crisis right now, the economy is worsening and it needs a quick fix. The country has a $4.7 billion lifeline approved by the IMF, which would be released over three and half years ending in 2026.

Venezuela: The country’s debt currently stands at $154 billion, which the country began defaulting in 2017. Its GDP has declined from $372.59 billion in 2012 to $102.33 billion in 2024. It was Latin America’s wealthiest country at one point in history and today it’s in the throes of bankruptcy led by an authoritarian leader who declared himself a winner in July, triggering a political turmoil that threatens an already slow economic recovery. The economy expanded by 5% last year and is expected to grow by 4% this year. The easing of global sanctions is partly responsible for the improved economic performance. The oil-rich country is also in talks to restructure its debt. Meanwhile, 82% of the country’s people live in poverty and while the inflation is cooling down, the price rise is still 25% more than a year earlier, according to latest data from the central bank.

Argentina: The South American country has defaulted thrice on its sovereign debt in the 21st century. It owes over $400 billion to creditors. It has had several debt restructurings in the past, the most recent being in 2023. President Javier Milei’s reforms have brought down yearly inflation from 300% to 236% in eight months. But that is still high by normal standards. The economy, too, has started to grow, albeit slowly. However, poverty levels have crossed 52.9%. Due to the uncertain economic outlook, Oxford Economics sees a 75% chance of a default in 2025 and 2027.

Zambia: The Southern African country defaulted on its Eurobond debt in 2020. This year, it also became the first country to restructure its $6.3 billion external debt. But the country faces significant challenges. Its stock of external arrears reached 26% of GDP by 2023, which the IMF says is unsustainable. Moreover, the country is yet to restructure at least $3.3 billion in commercial loans. The IMF believes that a failure to restructure commercial loans and certain clauses in the 2024 debt restructuring deal could bring Zambia on the verge of another default.

Ghana: The African country’s total debt stands at $44 billion—70.6% of the GDP. It defaulted on most of its external debt in December 2022, plunging the economy into a crisis. Debt costs and inflation surged. Ghana’s forex reserves dwindled from $9.7 billion in 2021 to $5.9 billion by 2023. The economy is now recovering, with the GDP growth for January- June 2024 averaging 5.8%. Inflation has fallen to its lowest since 2022. The IMF argues that its $3 billion package, approved in May 2023, has helped the economy. The country’s prospects seem brighter after recently reaching a $13 billion debt restructuring deal. The lenders will let go 40% of the debt as part of the deal, according to a Financial Times report.