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a devastating financial crisis
inability to repay existing debts to the IMF
high inflation
severe economic crisis
shortages of essential basic services leaving 80% of the population without enough food
There are many population uprisings and riots in Sri Lanka. The people have had enough. The Prime Minister's decision to officially declare the country bankrupt is a logical consequence of all the above. He had no other choice ( anymore ).
https://www.news.com.au/finance/economy/world-economy/collapsed-sri-lankan-prime-minister-declares-nation-now-bankrupt/news-story/4036098a1771187562f81864146ee308
Here, pundits and politicians think differently about inflation, sovereign debt, recession and possible deficits.
Inflation is a win for the government, they say. We are even moving towards a balanced budget !
"Those who are in debt, preferably a lot, benefit when money depreciates: after all, real debt evaporates visibly. In this sense, the current period of inflation rates peaking at around 10 per cent is a godsend for any government in debt: in Belgium, that means everyone.
"But there is more to it, for the federated states. Because Flanders, Brussels and Wallonia depend to a large extent on the endowments, which they receive through the Finance Act and thus the federal government: those run with the index.
"So the effect on the revenues of those governments is there much earlier in Flanders and Wallonia, than for the federal government, which is a bit behind, through taxes. Although there is a big effect there too: on excise duties at the pump and also taxes (through the discs), there are all kinds of positive effects due to inflation on revenues. Only, due to purchasing power measures, among others, expenditure is also correspondingly higher.
Anyway: for Flanders, therefore, there is a "very significant effect" on the budget, concludes SERV, the Social and Economic Council of Flanders.
Which calculated that while there is 2.4 billion more expenditure due to inflation for the Flemish budget, there is also some 3.6 billion more revenue in 2023, and 3.4 billion in 2024.
This means that the government of prime minister Jan Jambon (N-VA) does come very close to a balance in 2024, there would still be a deficit of some 260 million euros, especially as it does not include in its accounts the spending of Oosterweel and other major construction projects.
So immediately, a balance is politically realistic again, at the end of the legislature. Against a staggering deficit at federal level, Jambon and co could thus lay down Flemish black figures: not politically uninteresting, if one wants to put another "winning story" about that Flemish team in the market. "
https://www.msn.com/nl-be/nieuws/overig/inflatie-is-zege-voor-overheid-zoveel-is-nu-wel-duidelijk/ar-AAZlEqx?ocid=msedgntp&cvid=5e5f5855e7c34f9e907ce093ec8f2550
What are they actually saying here ?
Inflation has caused prices to rise sharply. Everything we buy is subject to VAT, taxes and excise duties. The more expensive the price, the higher the VAT revenue and this accrues from taxes, duties and other taxes we pocket.
So we, the citizens, are paying off state debts.
And they can then have a full laugh at that too....
At least along the Flemish government, which is rubbing its hands together. At the federal side, on the other hand, it is poorer. There is reportedly a staggering deficit at the federal level. So expect all kinds of tax increases. The federal will also want to fill its well with additional revenue aka taxes.
With a total public debt of more than 510 billion euros and debts further piled up ( it can't stop ), our country has also been virtually bankrupt for a long time.
High inflation is leading to rising interest rates on long-term debt. The Federal Reserve Bank in the US recently raised interest rates by 0.75 percentage points. The ECB in June 2022 has also already raised interest rates for July 2022 by 0.25 percentage points with option of further increases.
https://www.rte.ie/news/business/2022/0609/1303722-ecb-interest-rates/
This will be felt by everyone who has a loan running in the foreseeable future. And ... so will the Belgian state. After all, it has to pay monthly interest on that 510 billion of national debt. If interest rates rise, the monthly interest payments increase. Are you with us?
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