Hyper Depreciating Assets

Hyper Depreciating Assets are those assets which are created with intention of positive return but suddenly terns useless and worthless. For example, an airport at island with few thousand population.  Expressway, highway connected two small towns.  Resorts, hotels etc in war-torn or politically unstable states. Large sea ports in small economic countries etc.

After great depression of 2008, there was a worldwide view on fast and huge investment in infrastructure to revamp the falls of economies.  Governments took huge loans for infrastructure development. In this line small economic countries also followed the same pattern of loan borrowing as developed nations do.

The fast demand of loan from these viable small economy countries was chased by some influential economies like Chinese government, and they distributed huge loans as overseas-development fund to them as a lure of infrastructure development.  Fast change in world scenario after Covid-19, the usability of loan based infrastructure of small countries reduced to zero.  For example, airports, and highways of Maldives, Sri Lanka, Nepal have no use due to fall of their prime economic sector, i.e. tourism. These nations fell in debt trap and now unable to service the loan in time.

The assents mainly airport, expressway, highways, ports etc could not earn the revenue as it was expected in loan proposal in South Asian countries.  Due to inflation and Covid-19 impact use of these infrastructure fell sharply and revenue reduced abruptly. Loss of revenue hampered not only infrastructure expansion but also turned into loan default.  Now a days, few South Asian Countries turned either as loan defaulters or they are re-appropriating their loan dues.   Inappropriate economic planning, unwise loan borrowing, investment on useless projects and immature political decisions caused rise in hyper depreciating assets in loan debt countries.