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Geostrategic magazine

Debito, solvibilità e clima: un nuovo dilemma per lo sviluppo

Homi Kharas and Charlotte Rivard, Brookings:

Developing countries face a dilemma. Most have run up public indebtedness in a sensible response to the global recession induced by COVID-19 lockdowns. This has led to a deterioration in creditworthiness but saved their economies and protected their most vulnerable citizens. In normal times, developing countries should be slowly restoring fiscal discipline and retrenching public spending to restore their credit scores, as recommended by international agencies. But times are not normal. The global economy is slowing, and many developing countries face growing setbacks from food, energy, and flood crises to drought and conflicts—all while facing the urgent need to transition to a low-carbon economy. Austerity is politically hard and may be economically injudicious.

Debt, creditworthiness, and climate: A new development dilemma (brookings.edu)