For instance recently Srilanka defaulted and i would like to understand how has their situation changed after the default announcement as compared to how it was lets say a month before the default?
In: 17
Your credit rating turns to shit.
It’s the same as if I lend you money and you default. I most likely won’t lend you money again and I’ll tell our friends not to lend you money either. Even if we do lend you money, we’re going to charge you high interest to compensate for the risk.
You can’t get money easily now, so you can’t buy a car or a house as easily. Your quality of life decreases.
Same with Sri Lanka. Investors won’t pour money into the country, development of infrastructure (and businesses) slows, less tax revenue, higher unemployment, lower quality of life for the citizens.
I should add that Sri Lanka currently has a 30 day grace period to figure out how to pay though. So shit won’t completely hit the fan until they go past this preemptive default.
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