As the world undergoes varying crises—climate disasters, the covid-19 pandemic, supply chain and banking turbulence—countries with fewer resources have relied on their foreign reserves to keep their economies afloat.
In 2020, during the covid-19 pandemic, governments from Belize to Zambia dipped into their cash and gold reserves, with Turkey using up half its reserves.
Governments of countries with more reserves have a bigger safety net when crisis strikes. These tend to be nations that are already financially well-off, such as Japan, Switzerland, and the US. China has the most cash and gold reserves of any country in the world: $3.43 trillion worth, according to data from the World Bank and IMF.
Poorer countries in dire situations
On the other end of the spectrum, countries with the smallest cash and gold reserves include Burundi, Samoa, and many other island-states. Dominica has the least amount of reserves, valued at $190.8 million. Island-states and other poorer countries are disproportionately affected by climate change and health emergencies, with little to no financial capability to address those issues.
Countries that aren’t in the most dire situations could still be in trouble when the next crisis occurs. Bolivia, for example, has barely enough cash reserves to cover three months’ worth of imports, prompting its central bank to sell US dollars to individuals to bring up its exchange rate.
Pakistan’s reserves, meanwhile, have fallen to an eight-year low due to the pandemic, rising inflation, and a weakened rupee. Pakistan also suffered from catastrophic floods that amounted to more than $30 billion of losses in the country in 2022.
Sri Lanka and Lebanon are other countries that have been severely impacted by economic catastrophes, including unstable food systems and effects of the war in Ukraine.