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Tag Archives: Debt

A Long, Uneven and Uncertain Ascent

By Gita Gopinath عربي, 中文, Español, Français, 日本語, Português, Русский  The COVID-19 pandemic continues to spread with over 1 million lives tragically lost so far. Living with the novel coronavirus has been a challenge like no other, but the world is adapting. As a result of eased lockdowns and the rapid deployment of policy support at an unprecedented scale by central banks and governments around the world, the global economy is coming back from the depths of its collapse in the first half of...

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Reform of the International Debt Architecture is Urgently Needed

By Kristalina Georgieva, Ceyla Pazarbasioglu, and Rhoda Weeks-Brown Español The COVID-19 pandemic has pushed debt levels to new heights. Compared to end-2019, average 2021 debt ratios are projected to rise by 20 percent of GDP in advanced economies, 10 percent of GDP in emerging market economies, and about 7 percent in low-income-countries. These increases come on top of debt levels that were already historically high. While many advanced economies still have the capacity to borrow, emerging...

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COVID-19 Response in Emerging Market Economies: Conventional Policies and Beyond

By Martin Mühleisen, Tryggvi Gudmundsson, and Hélène Poirson Ward Español, Português The economic impact of the COVID-19 pandemic on emerging market economies far exceeded that of the global financial crisis. Unlike previous crises, the response has been decisive just like in advanced economies. Yet, conventional policies are reaching their limit and unorthodox policies are not without risks. A pandemic still unfolding COVID-19 is still to play out fully in the emerging market universe (see...

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Toward a More Resilient Europe

By Poul M. Thomsen 中文, Français, Português, Русский  Europe, like the rest of the world, faces an extended crisis. An element of social distancing—mandatory or voluntary—will be with us for as long as this pandemic persists. This, coupled with continued supply chain disruptions and other problems, is prolonging an already difficult situation. Based on updated IMF projections released last month, we now expect real GDP in the European Union to contract by 9.3 percent in 2020 and then grow by...

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Financial Conditions Have Eased, but Insolvencies Loom Large

By Tobias Adrian and Fabio Natalucci عربي, Español, Français, 日本語 Amid the human tragedy and economic recession caused by the COVID-19 pandemic, the recent surge in risk appetite in financial markets has caught analysts’ attention. After sharp declines in February and March, equity markets have rallied back, in some cases to close to their January levels, while credit spreads have narrowed significantly, even for riskier investments. This has created an apparent disconnect between financial...

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How the Bank of Canada’s balance sheet went from $118 billion to $440 billion in eight weeks

Ever since the coronavirus hit, the Bank of Canada's balance sheet has exploded. In late February its assets measured just $118 billion. Eight weeks later the Bank of Canada has $440 billion in assets. That's a $320 billion jump! To put this in context, I've charted out the Bank of Canada's assets going back to when it was founded in 1935. (Note: to make the distant past comparable to the present, the axis uses logarithmic scaling.) The rate of increase in Bank of Canada assets far exceeds...

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A Global Crisis Like No Other Needs a Global Response Like No Other

By Kristalina Georgieva عربي, Português I have been saying for a while that this is a “crisis like no other.” It is: More complex, with interlinked shocks to our health and our economies that have brought our way of life to an almost complete stop; More uncertain, as we are learning only gradually how to treat the novel virus, make containment most effective, and restart our economies; and Truly global. Pandemics don’t respect borders, neither do the economic shocks they...

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Fiscal Policies to Contain the Damage from COVID-19

Vitor Gaspar, W. Raphael Lam, and Mehdi Raissi عربي, 中文, Español, Français, 日本語, Português, Русский In times of pandemic, fiscal policy is key to save lives and protect people. Governments have to do whatever it takes. But they must make sure to keep the receipts. The Fiscal Monitor shows how policymakers can offer emergency lifelines to: save lives; protect people from losing jobs and incomes, and companies from bankruptcies; and enable a recovery. So far, countries have taken fiscal...

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Chart of the Week Frontier Market Borrowing Binge

By IMFBlog Español, Português Rock bottom global interest rates have been a boon for so-called frontier-market countries, which have been able to borrow cheaply to finance their development needs. But there can be too much of a good thing: countries that don’t put the money to good use may have trouble servicing their loans and find themselves at risk of default. As the Chart of the Week shows, hard-currency bond sales by frontier issuers—countries such as Angola, Belarus, Ecuador, and...

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A free market case for CBDC?

Central bank digital currency, or CBDC, is a form of highly-liquid digital debt that most governments have, till now, held back from issuing. But there is a growing push to change this. Free market economists are generally not big fans of CBDC. They see it as government encroachment on the banking sector.In this post I'm going to push back on the free market consensus. (This post was inspired after reading posts by Tyler Cowen and Scott Sumner).Look, we're always going to have a...

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