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The current state of the global economy and the outlook for the next few years do not bode well for Emerging Market and Developing Economies (EMDEs). Many countries were overly indebted before the pandemic and additional borrowing, one of the few options available to them, will push many into the terrain of unsustainable debt. China’s joining the Debt Service Suspension Initiative of the G-20 is commendable; however, this action only deals with official debt held by poorer EMDEs. The biggest problem involves middle-income borrowers, and the external debt that they owe to commercial creditors, including China’s largest banks, some of which is connected to the Belt and Road Initiative.
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Author: Danny Leipziger
Blog: The Bretton Woods Committee | January 2021
Access: China Has a Unique Opportunity to Take the Lead on Emerging Market Indebtedness
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