What to do about the coming debt crisis in developing countries

Source:Brookings papers Date:15Apr2020

This article by Homi Kharas is comprehensive in addressing the dimensions of the debt stress, as well as ingenious in proposing solutions. A must read for  EM enthusiasts


One indication that the problem is widespread is that already 90 countries have approached the IMF to access emergency financing instruments. It seems clear that this is not just a low-income or an African country problem.

There are several calls for debt standstills (herehere and here) to ease the burden on developing countries. Debt threatens to create a global development emergency in much the same way as the pandemic is creating a global health emergency. Both could result in social unrest and instability. Something will have to be done, so it is useful to recap the lessons from previous debt crises.