Illustration: Sarah Grillo/Axios
Coronavirus infections are rising in emerging countries like Brazil, Russia and India, which are now three of the five countries with the highest number of confirmed cases.
Why it matters: To offset some of the negative economic impact from the pandemic, governments have announced massive fiscal packages and new borrowing that threatens their credit ratings and the sustainability of their budgets, the IMF warned in its latest World Economic Outlook.
What they're saying: “The steep contraction in economic activity and fiscal revenues, along with the sizable fiscal support, has further stretched public finances, with global public debt projected to reach more than 100% of GDP this year,” the fund said.
- In its base-case scenario, global public debt will reach a record high in 2020 of 101.5% of GDP and 103.2% of GDP in 2021.
What to watch: At its April meeting the IMF recommended coordinated fiscal stimulus, a moratorium on debt payment and debt restructurings, and additional financing and grants for the world's poorest countries.
- Outside of financing and grants from the IMF and World Bank and a moratorium from official creditors for some countries, none of that has yet materialized.
The bottom line: Unless action is taken, the emerging world could face an escalating virus epidemic with less available capital and a growing pile of debt.