Seven countries that are bankrupt or need bailout to avoid default

Bangladesh: The country’s total debt amounts to $156 billion, five times more than in 2008 and is rated “junk” by global rating agencies such as 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 foreign exchange reserves have fallen from $32 billion in January 2023 to $20 billion in September 2024. The central bank has devalued the taka in recent years, but that has not helped so far. The Asian Development Bank expects inflation to rise to 10.1% in FY25, largely due to high food prices. There are also fears of a bank run due to the increasing number of unpaid loans. While there is no debt crisis right now, the economy is getting worse and needs a quick fix. The country has a lifeline of 4.7 billion dollars approved by the IMF, which would be released for three and a half years until 2026.

Venezuela: The country’s debt currently amounts to $154 billion, an amount that the country began to default on in 2017. Its GDP has decreased from $372.59 billion in 2012 to $102.33 billion in 2024. It was the richest country in Latin America in a moment in history and today it is in the middle of the crisis. bankruptcy led by an authoritarian leader who declared himself winner in July, triggering political turmoil that threatens an already slow economic recovery. The economy grew 5% last year and is expected to grow 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 population lives in poverty and, although inflation is cooling, price growth is still 25% higher than a year earlier, according to the latest central bank data.

Argentina: The South American country has defaulted on its sovereign debt three times in the 21st century. It owes more than $400 billion to its creditors. It has had several debt restructurings in the past, the most recent being in 2023. President Javier Milei’s reforms have reduced annual inflation from 300% to 236% in eight months. But that figure is still high compared to normal standards. The economy has also begun to grow, albeit slowly. However, poverty levels have exceeded 52.9%. Due to the uncertain economic outlook, Oxford Economics sees a 75% chance of 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 foreign debt. But the country faces significant challenges. Its balance of external arrears reached 26% of GDP in 2023, which, according to the IMF, is unsustainable. Additionally, the country still must restructure at least $3.3 billion in commercial loans. The IMF believes that if commercial loans and certain clauses of the 2024 debt restructuring agreement are not restructured, Zambia could be on the brink of another default.

Ghana: The total debt of the African country amounts to 44 billion dollars: 70.6% of GDP. It defaulted on most of its foreign debt in December 2022, plunging the economy into crisis. Debt costs and inflation increased. Ghana’s foreign exchange reserves decreased from $9.7 billion in 2021 to $5.9 billion in 2023. The economy is now recovering and GDP growth between January and June 2024 averaged 5.8%. Inflation has fallen to its lowest level since 2022. The IMF maintains that its $3 billion package, approved in May 2023, has helped the economy. The country’s prospects look brighter after recently reaching a $13 billion debt restructuring deal. Lenders will release 40% of the debt as part of the deal, according to a Financial Times report.