Populism Poses Larger Challenge Across Developing Nations: Lankan Prez Wickremesinghe

We believe that we performed well after the economic crisis, we had 2 per cent growth last but the question is how you will pay this debt so we are talking to the international organisation but as we also started focusing on the tourism sector and we will have money to pay the debt, Ranil Wickremesinghe, President of Sri Lanka said at the World Economic Forum in Davos.

Populism has been a bigger problem across the developing countries. Apart from this, we have been foreign investment but we think we want to live on our own and we want to debt-free Africa in particular,” Wickremesinghe added. 

With nearly 1.4 billion people or approximately one-sixth of the world’s population, Africa’s importance in the global economy is growing. Yet, since the turn of the century, the continent has been faced with several shocks that have arisen largely beyond its borders.

Beginning with the global financial crisis of 2008 and, more recently, the Covid-19 pandemic and the war in Ukraine, Africa’s vulnerabilities have been brought to light. Subsequently, the continent’s need to increase its resilience and independence from the rest of the world has taken on greater importance.

Nigeria’s external debt stands presently at USD 34 billion. About USD 28 billion or 85 per cent of the debt is owed to the Paris Club of 15 creditor nations. Only 8 per cent of the debt is owed to multilateral institutions such as the African Development Bank and the World Bank whilst the balance of 7 per cent is owed to the London Club of commercial creditors and holders of Promissory Notes.

Vice-President of Nigeria, Kashim Shettima said that we are trying to digitise our governance system and this new administration in Nigeria focusing on the interest rate and consolidating fiscal plans.

Chair of the Board at Liquidity and Sustainability Facility, Vera Songwe emphasised that the emerging market is doing well. However, in the developed world, household loans touched all the high. There is a group of countries which are growing and there is a huge investment in the renewable energy sector.

Laura Alfaro, Professor at Harvard Business School believes that in an emerging market, we need to be careful. We do have diversity and must maintain a private market and they continue to buy from international markets for example Argentina. You need to pay debt and need to control debt to GDP. Still, it is not as bad as it used to be in past but many people believe it may go bad, Alfaro added.