Here are two short videos.
Something unthinkable has happened. Sri Lanka has ANNOUNCED a deliberate default on all its US$51 Billion foreign debt.
International bankers and lenders who have extended loans to Sri Lanka will be in deep trouble. The international lenders (from London to New York) may have to declare bankruptcy too.
Turkey, Pakistan, Egypt and Nepal may also be facing the same crisis. They will certainly be watching closely what will happen to Sri Lanka, its economy and the Sri Lankan currency.
Imagine a situation if Turkey, Pakistan and Egypt also announce that they will NOT be able to pay their foreign loans. The world financial system may also collapse.
(I hope there is some one or some senior person in the Ministry of Finance and Bank Negara who is monitoring this situation closely. Please do not get caught by surprise.)
My guess is the Sri Lankan rupee will crash even further and become a worthless currency - like the Japanese banana currency in World War 2.
International lenders like the IMF, World Bank, foreign banks will now be thinking twice already about lending any more money to Third World countries in the future. This could be the end of international lending.
The views expressed are those of the writer and do not necessarily reflect those of MMKtT.
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