Will the United States become the 6th country in the world that defaults on debt, aka bankruptcy? Default ?

The United States (US) is faced with the threat of debt default of USD 31.45 trillion or equivalent to Rp. 462,000 trillion, as of March 2023. This total debt places America as the first country with the most debt in the world.

United States (US) Finance Minister Janet Yellen again reminded that if the United States did not raise the debt ceiling it could have an impact on the US economy.

If the US does not raise the debt ceiling, the US government will potentially be unable to pay wages, welfare and other payments. "It is the job of Congress to do this. If they fail to do so, we will face an economic and financial disaster of our own making," he said.

Previously, several countries had experienced bankruptcy due to debt defaults, most recently Sri Lanka. The following is a row of countries that went bankrupt due to debt defaults.

1. Sri Lanka

In 2022, the International Monetary Fund (IMF) noted that Sri Lanka defaulted on a debt of USD 51 billion. This figure is equivalent to IDR 732 trillion assuming an exchange rate of IDR 14,360 per USD.

Seeing these conditions, developing countries began to receive the spotlight. Meanwhile, Indonesia's debt is relatively low compared to the debt position of ASEAN countries, the G20, and several world countries.

However, the government continues to manage debt prudently and anticipate various possibilities. Steps taken include optimizing state spending according to needs, increasing state revenues which are currently benefiting from international commodity prices and cooperation with Bank Indonesia.

2. Argentina

In 2001, Argentina was declared bankrupt because it failed to pay the state debt of USD 100 billion. All of this stems from the policy of the Argentine government which pegs USD 1 to 1 Argentine peso.

Argentina has taken various restructuring steps. It was recorded that in 2005 and 2010 the country gathered creditors to discuss debt restructuring which could reach USD 100 billion.

Most of the major creditors agreed to accept the restructuring scheme offered by Argentina. In that case, Argentina succeeded in restructuring its debt by cutting debt by 70 percent. This means that Argentina's debt is only around USD 30 billion.

In 2018, the Argentine government unexpectedly applied for an initial loan of USD 50 billion or around IDR 729.69 trillion (assuming an exchange rate of IDR 14,593 per US dollar) from the International Monetary Fund (IMF). This triggered the economic crisis that occurred. The economic crisis caused rampant inflation. The Argentine peso exchange rate weakened 40 percent in 2018.

3. Zimbabwe

In 2008, Zimbabwe, a country in the African region, also recorded a dark story in its economic history. At that time, one of the poorest countries in Africa was in debt of USD 4.5 billion. With the deplorable economic conditions, the government must also struggle with the rate of action that is getting out of control, reaching 80 percent.

In 2008, Zimbabwe actually experienced an economic downturn and had a very broad impact on almost all of its people. Zimbabwean society began to stop using banks.

Not only that, Zimbabweans stopped paying taxes and no longer used the national currency as a means of buying and selling transactions. Worse, a study conducted by Yale University showed that Zimbabwe is a country with the fastest economic decline in the world.

4. Greece

Greece has been officially declared bankrupt since June 30 2015. Greece's total debt so far has been recorded at USD 360 billion or equivalent to Rp. 5,255 trillion (exchange rate of IDR 14,593). This situation tends to get worse when there are more homeless people in Greece, and they are very hungry.

In Greece, the number of homeless or homeless people has increased by 40 percent. The Greek government estimates there are around 20,000 homeless people in Athens out of a total population of 660,000. The increase in the number of homeless people in Greece was cited as a result of the economic crisis that hit since 2010. The response rate jumped from 10.6 percent in 2004 to 26.5 percent in 2014.

5. Venezuela

The Venezuelan crisis is also due to being in debt. According to the Central Bank of Venezuela, the foreign debt of the Venezuelan state in 2014 includes Venezuela's public debt. This debt constitutes 55 percent of the total and is in the form of domestic and foreign debt obligations, government bonds and bank loans.

Then the PDVSA financial debt is 21 percent. As much as 15 percent of foreign debt through financing obtained through Chinese funds. Then CADIVI's debt is 9 percent. This is CADIVI non-financial debt (currency for imports, dividends, income and services in general).

In November 2017, The Economist estimated Venezuela's debt at USD 105 billion and reserves at USD 10 billion.