The similarity between the economic crises in Sri Lanka and Zimbabwe and why Angola and your country might be next in line
Who in 2019 would think that Sri Lanka economy would one day be viewed as crypto altcoin crushing and confuse us even more between fiat money inflation and NFT imaginative wealth on which one is more secure, after the three decade long civil war, Sri Lanka was worth $84 billion by nominal gross domestic product (GDP) in 2019 and $296.959 billion by purchasing power parity (PPP) The country had experienced an annual growth of 6.4 percent from 2003 to 2012, well above its regional, just like Sri Lanka, Zimbabwe was once a very prosperous nation and with many similarity from the colonialism independence, civil war, corruption and economic crisis.
The history of Sri Lanka and Zimbabwe’s gives us critical clues from which we can build a powerful framework for broader understanding of inflation and how money can kill a country and base on these countries we can have clues on which direction our country is taking as for me, my country Angola might be the next one. I hope you will be able spot the similarities between these countries and your country.
Money from Heaven will be the path to Hell.
– Robert Wiedemer, Economist
The Civil War independence
Achilles heel of these countries was the upcoming after the colonial independence, because right after the colonial indenpendence there was a war dispute where the winner became greed and tried to proof to everyone that they can build a country in 5 or less years after civil war instead of scaling, they took loan for granted and tried to proof that the US founders fathers were slow for scaling and being conservative for decades.
1- The Zimbabwe civil war independence
The Rhodesian Bush War, also called the Second Chimurenga as well as the Zimbabwe War of Liberation, was a civil conflict from July 1964 to December 1979 in the at the time Rhodesia (later Zimbabwe-Rhodesia) which was not recognized as country by the UK or the Commonwealth, The conflict pitted three forces against one another namely the Rhodesian white minority; the Zimbabwe African National Liberation Army which was the military wing of Robert Mugabe’s Zimbabwe African National Union; and the Zimbabwe People’s Revolutionary Army of Joshua Nkomo’s Zimbabwe African People’s Union the war took place after the colonial independence from the Engled.
Negotiations between the government of Zimbabwe-Rhodesia, took place at Lancaster House, London in December 1979, and the Lancaster House Agreement was signed and ZANU won the election and Mugabe became the first Prime Minister of Zimbabwe on 18 April 1980, when the country achieved internationally recognised independence.
2- The Sri Lanka civil war independence
In the years following Sri Lanka’s independence from the British Empire in 1948, Sri Lankan was in a civil war from the beginning of 23 July 1983, there was an intermittent insurgency against the government by the Velupillai Prabhakaran-led Liberation Tigers of Tamil Eelam. The LTTE fought to create an independent Tamil state called Tamil Eelam in the north-east of the island, due to the continuous discrimination and violent persecutiona gainst Sri Lankan Tamils by the Sinhalese dominated Sri Lankan Government.
Shortly after gaining independence, Sinhala was recognized as the sole official language of the nation. After a 26-year military campaign, the Sri Lankan Armed Forces militarily defeated the Tamil Tigers in May 2009, bringing the civil war to an end.
3- The Angola civil war independence
Just like Zimbabwe and Sri Lanka Angola had a civil war between two major political parties MPLA and UNITA which had different roots in Angolan society and mutually incompatible leaderships, despite their shared aim of ending colonial ruler. A third movement, the National Front for the Liberation of Angola (FNLA), having fought the MPLA with UNITA during the war for independence, played almost no role in the civil war. Additionally, the Front for the Liberation of the Enclave of Cabinda (FLEC), an association of separatist militant groups, fought for the independence of the province of Cabinda from Angola well from 1975 up to 2002.
The golden years followed by economic crisis
No one will value paradise if they have never been to hell, and the lideres of these countries they value the paradise on very personal level and took it for granted by eating all the fruits without thinking about of what happened to the last couple that was there.
1- Zimbabwe Golden years and the economic crisis
In 1980 to 1988 Zimbabwe finds favour with international lenders. Past economic success and new found global acceptance mask underlying economic mismanagement, corruption and ethnic tension by over spending on great causes as government anf trying to earn people trust by investing the borrowed money on liabilities (at least at that time) and personal desires instead of asset to repay the debt.
Things such as children vaccinated increased from 25% in 1980 to 67% in 1988, In 1992; World Bank study indicated that more than 500 health centres had been built since 1980; Enrolment increased by 232 percent one year after primary education was made free, Several laws were passed in the 1980s in an attempt to reduce wage gaps; a bonus to independence war veterans was announced in 1997 (which was equal to 3 percent of GDP), These social policies lead to an increase in the debt ratio without forgeting the involvement in the Second Congo War in 1998. Zimbabwe experienced its first defaults on its IMF, World Bank, and African Development Bank debts in addition to debts taken out with Western lenders beause it was unable to pay it back, what the insinders where see as growth was a trap in reality, that is when the the harsh reality happened in 1997 november 14 the so called Black friday currency crash and 1999 full scale money printing inflation rises to 57%, 2008 Hyperinflation pushes the country into shudown with an annual inflation rate of 89.7 sextrillion %, petrol had more value than money.
2- Sri Lanka Golden years and the economic crisis
Just like Zimbabwe post civil war, in May 2009 the Sri Lanka economy started growing at a higher rate of 8.0% in the year 2010 and reached 9.1% in 2012 by implementing government policies and economic reforms to create Western Region Megapolis to promote economic growth but all these project mostly due to the boom in non-tradable sectors; however, the boom did not last after two years of money printing and tax cuts made for fiscal and monetary stimulus Sri Lanka declared a ‘pre-emptive negotiated default’ saying most foreign debt would not be repaid from April 12 and the GDP of 2013 growth fell to 3.4% and only slightly recovered to 4.5% in 2014, despite all the warning from World Bank regarding the public and publicly guaranteed debt could rise to 115% in 2021, just a quick summary after growing 5.0% in 2015, growth fell to 4% in 2016, 4% in 2017, 3% in 2018 and 2% in 2019 followed by the bankruptcy due to foreign reserves falling to US$1.9 billion as of March 2022, this being insufficient to pay the foreign debt obligations of US$4 billion and an International Sovereign Bond (ISB) payment of US$1 billion for the year 2022.
3- Angola Golden years and the economic crisis
After a long raining night there might be a long sun shining day but unfortunately we do not know for how long it will last. After the civil in 2002 and 27 years of destruction, the Angola govenment turn to Chine for help rather than the West that agreed to fund the country’s reconstruction, in 2004 Export-Import Bank of China pledged US$2 billion in oil-backed loans to fund reconstruction plus aproxmately 300,000 chines citizen exported to Angola, and became a star performer in sub-Saharan Africa, with its economy growing by an average of 11% a year between 2001 and 2010 in what came to be known as the Angola model and was used on others African countries. the model was successful until oil prices fell, forcing the country to pump more oil to service its debts.
But the boom was short-lived. When global oil prices plummeted to below US$50 a barrel in mid-2014 from a high of US$115 per barrel, the Angolan economy suffered. It fell into recession in 2016 and contracted for five consecutive years, In 2019, the governmente admitted the concept behind the oil-backed loans the country had signed with China was not working and that it was a mistake made by the previous president because the government still the same and with the smae business strategy.
Key takeaways
These three countries (Zimbabwe, Sri Lanka and Angola) have theree things in commom which are the reason of the civil wars which in short word was more of ambitious, the end of civil with a totalitarianism of a single political party taking the power as winner, the get rich and show off schem by borrowing money without a proper backup plan and investment to pay back the debts.
