Ever since public-debt levels soared during the pandemic, developing countries have faced mounting liquidity challenges. Yet the severity of the crisis is not reflected in the agenda for global cooperation, and no meaningful progress has been made toward a comprehensive debt-restructuring mechanism.
BOGOTÁ – Since the onset of the COVID-19 pandemic, the developing world has faced growing public-sector debt vulnerabilities. Interest-rate hikes and limited access to international capital markets have only exacerbated the problem – so much so that even solvent countries are now grappling with liquidity challenges. Furthermore, the International Monetary Fund predicts that, in the coming years, developing countries’ debt levels will remain higher than in 2019. It seems clear that many low- and middle-income countries will continue to experience debt stress, even if they are not at risk of default.
BOGOTÁ – Since the onset of the COVID-19 pandemic, the developing world has faced growing public-sector debt vulnerabilities. Interest-rate hikes and limited access to international capital markets have only exacerbated the problem – so much so that even solvent countries are now grappling with liquidity challenges. Furthermore, the International Monetary Fund predicts that, in the coming years, developing countries’ debt levels will remain higher than in 2019. It seems clear that many low- and middle-income countries will continue to experience debt stress, even if they are not at risk of default.