COVID | Emerging Markets | Fiscal Policy
How EMs Can Reduce Debt After the Pandemic
- By Sam van de Schootbrugge
- 6 min read
Although a lifeline for many, the fiscal splurge during the pandemic made 2020 the largest single-year rise in global debt since at least 1970. It rose by 29pp of global GDP. And in emerging markets and developed economies (EMDEs), total debt reached 206% of GDP (Chart 1).
While exceptional, the yearly spike is just the crest of a decade-long global debt wave. Nine in 10 EMDEs now have more debt than in 2010 and, in over half of these, debt has risen by more than 30pp of GDP. With the interest burden on these debts rising, what can EMDEs do?
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