In this Issue:

  • The Emerging Debt Pandemic
  • Green: More Than the Color of Money
  • No More Bitcoin Questions, Please

COVID-19 is truly the mother of all crises, and no economy in the world has been spared. While some are returning to growth, many are finding it extremely difficult to engineer a recovery. Advanced economies had the fiscal space to support themselves by accruing large sums of debt, but many developing economies lack sufficient financial resources to improve public and economic health. Entire nations are finding themselves on the downward leg of the K-shaped recovery, and may require forbearance from their creditors.

The pandemic is pushing an increasing number of developing countries into debt distress. Many of them were already experiencing what is known as a debt super-cycle, in which the interest on accumulated debt reaches to a point where it becomes difficult to service. For some countries, a crisis looks imminent, while for others the day of reckoning has been delayed by the exceptionally low global interest rate environment.

The past decade has witnessed the largest and fastest debt buildup ever seen in emerging markets (EMs). Although China accounts for a significant part of this increase, debt buildup has been broad-based across EMs. Fortunately for now, investor appetite for EM debt has been rising, pushing yields down noticeably.


With trade, tourism, remittances and investment flows disrupted by the pandemic, many EMs have seen a drastic decline in their foreign exchange incomes, which makes it harder to service their debt obligations. Problems are seen across regions; some nations find themselves back in trouble after a long history of defaults.

According to the United Nations Conference on Trade and Development, developing economies are facing repayments of between $2.6 trillion and $3.4 trillion on their public external debt in 2020 and 2021. Default risk is rising, and so is the call for debt relief. EMs will require support in the form of grants, concessional financing or debt restructuring.