Now that the COVID-19 pandemic has ushered in a steep economic downturn, highly indebted emerging markets and developing countries are facing potentially ruinous fiscal crises, the costs of which will fall on ordinary citizens. Fortunately, there is a way to address the problem that is both practical and just.
BOSTON – With more than $7.5 trillion owed to external creditors, emerging economies’ debt-service costs are becoming increasingly onerous just when they need as much fiscal space as possible to confront the COVID-19 crisis. While there is a strong case for canceling much of this debt, many key players oppose doing so, arguing that it would limit these countries’ access to international markets in the future, thereby reducing investment and growth.
BOSTON – With more than $7.5 trillion owed to external creditors, emerging economies’ debt-service costs are becoming increasingly onerous just when they need as much fiscal space as possible to confront the COVID-19 crisis. While there is a strong case for canceling much of this debt, many key players oppose doing so, arguing that it would limit these countries’ access to international markets in the future, thereby reducing investment and growth.