Shining a Light on Debt

Pazarbasioglu, Ceyla and Reinhart, Carmen (2022): Shining a Light on Debt. Published in: Finance and Development No. Spring (1 March 2022): pp. 10-13.

Abstract

As the COVID-19 crisis lingers, emerging market and developing economies are entering perilous waters that evoke memories of past debt defaults. Although all countries amassed debt to fight the pandemic, the economic recovery in these economies substantially lags their advanced economy counterparts. Tighter monetary policies in advanced economies are poised to push up international interest rates, which tends to put pressure on currencies and heighten the odds of default. To complicate matters, the extent of many emerging market and developing economy liabilities and their terms aren’t fully known. If they are to foster a sustained recovery and limit the risk of a crisis, they must make a full accounting of hidden debts, both public and private.

• Item Type: MPRA Paper
• Language: English
• Keywords: public debt, private debt, transparency, banks, bad loans, hidden debts
• Subjects: E - Macroeconomics and Monetary Economics > E0 - General; F - International Economics > F3 - International Finance; F - International Economics > F3 - International Finance > F34 - International Lending and Debt Problems; G - Financial Economics > G0 - General; G - Financial Economics > G0 - General > G01 - Financial Crises; G - Financial Economics > G2 - Financial Institutions and Services; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

References

Gelpern, Anna, Sebastian Horn, Christoph Trebesch, Scott Morris, and Bradley Parks. 2021. “How China Lends: A Rare Look at 100 Debt Contracts with Foreign Governments.” Peterson Institute for International Economics Working Paper Series WP21-7, Washington, DC. Horn, Sebastian, David Mihalyi, and Philipp Nickol. 2022. “Hidden Debt Revelations.” Unpublished. World Bank, Washington, DC. Horn, Sebastian, Carmen M. Reinhart, and Christoph Trebesch. Forthcoming. “Hidden Defaults.” American Economic Review: Papers and Proceedings, May 2022. International Monetary Fund (IMF). 2021. “Issues in Restructuring of Sovereign Domestic Debt.” Policy Paper 2021/071, Washington, DC. Reinhart, Carmen M., and Kenneth S. Rogoff. 2011. “From Financial Crash to Debt Crisis.” American Economic Review 191 (5): 1676–706.