capital leaves low- and middle-income countries (LMICs) at the first sign of any problem…
https://www.theguardian.com/world/commentisfree/2022/jul/26/…
…and Sri Lanka, because of its current internal lunacy, is first but not last to be abandoned and carnage insues. The above article is solid and to the point. Two weeks ago I dumped my small but nicely performing stake in developing nations dividend paying funds as part of my overall “batten down the hatches” actions.
I am glad I did.
Sri Lanka used to be known as Ceylon. Its major export is tea.
The article seems to gloss over several issues and to blame the former government for failure to overcome those problems. Excessive debt from efforts to modernize with investments that failed to payoff.
The main problem is the impact of Covid and inflation from rising fuel costs. They also fought a war with Tamil Tigers. Exports declined as did tourism.
I read that they attempted to resolve the shortage of expensive fertilizer by switching to organic agriculture. But that resulted in low yields and food shortages.
Hard times will make life difficult for the poorest. That is true in society and among nations.
The best we can do is send aid while they work it out. No easy answers.
The “former governemt” was a ludicrously corrupt family that made idiot decisions and then made still more idiot decisions (ending fertilizer and shifting to a supposed ‘organic system’ that was simply chaos from ending fertilizers) in desperate attempt to cure problems.
However, that is merely why Sri Lanka is at the head of the line of bankruptcy, and the article also goes into the more common nightmare of governmental and private debts in hard currencies acquired during the last decades of low interest and now needing refinance at high interest.
david fb
“The “former governemt” was a ludicrously corrupt family that made idiot decisions and then made still more idiot decisions … in desperate attempt to cure problems.”
For a moment there, I thought you were talking about the US rather than Sri Lanka ;-}