Smaller Countries May Soon Go Bankrupt 😨
As per the current situation, it's not new to see news about smaller countries like Sri Lanka, Turkey,… which may go bankrupt by the end of 2022.
The economic slowdown and increasing Covid-19 strain are considered to be the major factors that will lead these countries towards bankruptcy.
BUT
1. What to do if you are living in one of these countries?
2. Should you migrate?
3. Will your life-saving end up to 0?
4. What is the local government planning?
5. Has government taken steps to mitigate such situations?
These are a few big questions that remain unanswered.
So let’s discuss solutions rather than talking about the predictions like
1. When will it happen?
2. How bad the situation is?
…..
As I had started my investment journey when I was 18, thus I know many insights about finance, various investment instruments, how to handle debts,… etc
Thus, today I will discuss Top 3 solutions to tackle the situation and boost up the economy.
Top 3 Solutions:
- Promote Startups:
Use the power of youth and entrepreneurs. They are the ones who will help create more jobs, attract new investments through their ideas, help increase exports and also help reduce dependency on foreign goods and services.
We can consider India as the best example of this, as providing free hands to youths and entrepreneurs, the number of unicorn startups has skyrocketed, exports have increased and foreign investments are also flooding in.
2. Try To Control Inflation:
Inflation can be a big hurdle when you are dealing with debt and an economic crisis. Thus, governments should take steps to reduce or at least control inflation rates.
Measures like:
A) Increase in interest rates on bank deposits
B) Ensuring that the daily essential items i.e. milk, grains, vegetables,… are in sufficient quantity to satisfy the needs of citizens
C) Temporary pausing non-priority as well as economically hefty government projects
Rather than employing such measures, what I can see is some countries are actually taking the complete opposite steps.
Countries like Turkey openly denied increasing interest rates on bank deposits because of some religious beliefs.
AND
Countries like Sri Lanka are using the military to distribute daily essential items to citizens at the cheapest rates but I think it's a temporary solution and can even lead to more disputes and issues as the merchants who had bought these products from lower levels like farmers,…. now need to surrender their holding at almost zero profits, so how will they buy the next batch of products, thus leading to even more crisis at lower levels.
Breaking the chain from lower levels will soon lead to its severe effects on top levels, which will eventually lead to a complete breakdown.
3. Stop Printing Currency
I really don’t know if I am a big fool who is seeing facts, figures and history about how printing more currency can eventually lead to the complete economic collapse of the entire country or the government of countries like Sri Lanka who are neglecting such facts from history.
Let me assume I am a big fool here, but what about the “n” number of articles, news reports and a dedicated Wikipedia page on “Hyperinflation in Zimbabwe”.
Time For Action
Still, there is time to mitigate the crisis and stop the worst part to happen. If the governments of these small countries don’t take some positive steps, then the end may not be far.
I have my fingers crossed that the responsible leaders of countries, government, economists and hopefully World Bank will work together and try their best to overcome this situation.
Wait, did I mention about China or not?
Yes, I really forgot the superhero here😎. China is an enormous threat to these countries as the policy of China is really spotless.
Provide big, unpayable loans to small countries and then take away their land and resources.
Ending Notes
I hope you have enjoyed the article and learned something new which will surely make a good impact on your life. I would be delighted if you just spare a moment for a clap and your valuable comment will be a cherry on top of the cake.
You can find me on LinkedIn, and I am also open for discussion on Email.
Remember that the above were my personal thoughts based on my experience in the finance and investment field, and someone else did not influence them. I am an active investor since I was 18 and also I have been providing financial advisory and investment services through my startup “UDT Finance”.
Till the next article comes out, I will miss you as the most precious reader. Signing Off “With Love Umang Thakkar”
