With interest rates rising in the developed world, borrowing costs for emerging markets are creeping up as well. The Federal Reserve has taken a hawkish turn, which will cause the US Dollar (USD) to appreciate and make USD-denominated debt servicing and imports more expensive. Capital flows to emerging markets excluding China have effectively come to a sudden stop over the past few months.
There has been significant innovation over the course of the pandemic to help emerging and frontier markets weather the crisis, but that innovation may prove to have fallen short now as accommodation is withdrawn.
This webinar will examine the current potential risk factors for an emerging market sovereign debt crisis, which countries are the most exposed and whether they are idiosyncratic or part of a broader trend. We will also discuss the policy innovations meant to help avoid a sovereign debt crisis, the role of new creditors in debt restructuring, the benefits and pitfalls of the Common Framework and what additional reforms the International Monetary Fund (IMF) should make to ensure debt restructurings are done proactively and with greater transparency.
This event will be co-hosted with the Harvard Kennedy School’s Mossavar-Rahmani Center for Business and Government.