shine india monthly magazine published this article page no 68 Impact on economic variables o Economic Recession or Currency Devaluation due to the withholding of future releases of assets by lenders and reduced access to debt markets for years to come. o Downgrade of Sovereign Rating by rating agencies which further reduces the ability to raise funds and ability to attract Foreign Investments. o Rise in Interest Rates to tackle high inflation leading to lower economic growth due to reduced investments. Impact on groundlevel economic scenario o Inability to import even necessary items such as food oil pharmaceuticals etc. with long queues for essentials. o Increased Cost of Living due to high inflation reducing peoples ability to save. o Loss of Jobs and lower spending on Health education etc. due to the Austerity Measures. Impact on politicoeconomic connections o It can cause collapse of financial institutions or political unrest in the country which can turn into civil war or revolution. o Erodes the confidence of foreign and domestic creditors making it more difficult and costly to refinance debt. Way Forward Overcoming external debt default and its future recurrence depends on the ability of nations to stay away from the Vicious Cycle of External Debt i.e. the cycle of continuous borrowing accumulating payment burden and eventual default. This can be done through measures such as shine india monthly magazine subscription.
