Chief International Monetary Fund Managing Director, said yesterday that Sri Lanka is a warning sign for countries with high debt levels and limited policy space.
Georgieva made these remarks at the G20 Finance Ministers and Central Bank Governors meeting in Indonesia.
The conflict in Ukraine has escalated, putting additional pressure on commodity and food prices. Global financial conditions are tightening faster than expected. She also stated that ongoing pandemic-related disruptions and renewed bottlenecks in global supply chains are weighing on economic activity.
“As a result, in our World Economic Outlook Update later this month, we will project a further downgrade to global growth for both 2022 and 2023. Furthermore, downside risks will persist and may worsen, particularly if inflation remains persistent, necessitating even stronger policy interventions that could impact growth and exacerbate spillovers, particularly to emerging and developing economies.
Countries with high levels of debt and limited policy options will face additional challenges. As a warning sign, look no further than Sri Lanka “She stated.
For the fourth month in a row, emerging and developing countries have seen consistent capital outflows. They now face the risk of falling further behind advanced economies after three decades of catching up.