Emerging Market Debt and Development Economics: a Retrospect from 1970 to the Covid

Camille FABRE * Économiste internationale en charge des pays à faible revenu, Banque de France.

Clément MARSILLI ** Économiste, chef du pôle de suivi des économies émergentes, Banque de France.Contact : Clement.MARSILLI@banque-france.fr. Les auteurs remercient Édouard Vidon, Vincent Fleurier, Sophie Rivaud et Luc Jacolin pour leurs commentaires et leurs suggestions. Cet article reflète les idées personnelles de leurs auteurs et n'exprime pas nécessairement la position de la Banque de France.

Following the Covid crisis, debt was mobilized on a large scale and rapidly, in the developed countries, the situation is more complicated for the emerging countries, and a fortiori the developing countries, because of the low level of local revenue mobilization in these countries, as well as limited access to financial markets, or else at high rates. The crisis is undermining the traditional public debt management instruments in emerging countries, and the analysis proposes the use of other contractual instruments to finance this debt.

In view of the magnitude in emerging countries financing needs, more private flows are needed because the response of multilateral organizations and official bilateral donors alone will not be sufficient. It is also necessary to ensure that the debt sustainability of these countries is not jeopardized and that, in the event of restructuring, it is shared equitably among all creditors. It is this balance that must guide all stakeholders in order to build a more secure financial system. And one that will ultimately enable these countries to be more resilient to natural disasters.