In the wake of unprecedented economic woes facing the island nation Sri Lanka with food and fuel shortages along with record inflation and crippling power cuts, Zerodha co-founder Nikhil Kamath took to Twitter to address that one can not outspend what they earn in the long run.
Amid the ongoing tensions in the neighboring island nation, the Zerodha co-founder tweeted a pertinent question, “you cant spend more than you earn, not forever at least, applies to everyone. Sri lanka bore the brunt of this recently, when will the US?”
This comes at a time when a critical lack of foreign currency has left Sri Lanka struggling to service its ballooning $51 billion foreign debt, with the pandemic torpedoing vital revenue from tourism and remittances. This has result in the country dealing with unprecedented food and fuel shortages along with record inflation and crippling power cuts and no sign of an end to the economic woes.
Meanwhile, the United States Federal Reserve last week announced a quarter-point increase in the benchmark interest rate to bring rising inflation under control, the first rate hike since the start of the Covid-19 pandemic, according to Agence France-Presse report.
Additionally, the policy-setting Federal Open Market Committee said the fallout from the war in Ukraine is “likely to create additional upward pressure on inflation and weigh on economic activity,” and noted that “ongoing increases” in the policy rate will be “appropriate.” Members of committee raised their US inflation forecast for the year to 4.2% from 2.6% previously, and slashed the growth estimate to 2.8% from 4.0%.
(With inputs from agencies)
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