The Aftermath of Debt Surges

Debt in emerging market and developing economies (EMDEs) is at its highest level in half a century. In about nine out of 10 EMDEs, debt is higher now than it was in 2010 and, in half of the EMDEs, debt is more than 30 percentage points of gross dom...

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Main Authors:	Kose, M. Ayhan, Ohnsorge, Franziska, Reinhart, Carmen, Rogoff, Kenneth
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2021
Subjects:	DEBT RESTRUCTURING FISCAL CONSOLIDATION FINANCIAL REPRESSION ECONOMIC GROWTH INFLATION DEBT BURDEN DEBT SUSTAINABILITY DEBT SERVICE
Online Access:	http://documents.worldbank.org/curated/undefined/249451631308017450/The-Aftermath-of-Debt-Surges http://hdl.handle.net/10986/36279

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spelling	okr-10986-362792021-09-18T05:10:34Z The Aftermath of Debt Surges Kose, M. Ayhan Ohnsorge, Franziska Reinhart, Carmen Rogoff, Kenneth DEBT RESTRUCTURING FISCAL CONSOLIDATION FINANCIAL REPRESSION ECONOMIC GROWTH INFLATION DEBT BURDEN DEBT SUSTAINABILITY DEBT SERVICE Debt in emerging market and developing economies (EMDEs) is at its highest level in half a century. In about nine out of 10 EMDEs, debt is higher now than it was in 2010 and, in half of the EMDEs, debt is more than 30 percentage points of gross domestic product higher. Historically, elevated debt levels increased the incidence of debt distress, particularly in EMDEs and particularly when financial market conditions turned less benign. This paper reviews an encompassing menu of options that have, in the past, helped lower debt burdens. Specifically, it examines orthodox options (enhancing growth, fiscal consolidation, privatization, and wealth taxation) and heterodox options (inflation, financial repression, debt default and restructuring). The mix of feasible options depends on country characteristics and the type of debt. However, none of these options comes without political, economic, and social costs. Some options may ultimately be ineffective unless vigorously implemented. Policy reversals in difficult times have been common. The challenges associated with debt reduction raise questions of global governance, including to what extent advanced economies can cast their net wider to cushion prospective shocks to EMDEs. 2021-09-17T17:35:23Z 2021-09-17T17:35:23Z 2021-09 Working Paper http://documents.worldbank.org/curated/undefined/249451631308017450/The-Aftermath-of-Debt-Surges http://hdl.handle.net/10986/36279 English Policy Research Working Paper;No. 9771 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	DEBT RESTRUCTURING FISCAL CONSOLIDATION FINANCIAL REPRESSION ECONOMIC GROWTH INFLATION DEBT BURDEN DEBT SUSTAINABILITY DEBT SERVICE
spellingShingle	DEBT RESTRUCTURING FISCAL CONSOLIDATION FINANCIAL REPRESSION ECONOMIC GROWTH INFLATION DEBT BURDEN DEBT SUSTAINABILITY DEBT SERVICE Kose, M. Ayhan Ohnsorge, Franziska Reinhart, Carmen Rogoff, Kenneth The Aftermath of Debt Surges
relation	Policy Research Working Paper;No. 9771
description	Debt in emerging market and developing economies (EMDEs) is at its highest level in half a century. In about nine out of 10 EMDEs, debt is higher now than it was in 2010 and, in half of the EMDEs, debt is more than 30 percentage points of gross domestic product higher. Historically, elevated debt levels increased the incidence of debt distress, particularly in EMDEs and particularly when financial market conditions turned less benign. This paper reviews an encompassing menu of options that have, in the past, helped lower debt burdens. Specifically, it examines orthodox options (enhancing growth, fiscal consolidation, privatization, and wealth taxation) and heterodox options (inflation, financial repression, debt default and restructuring). The mix of feasible options depends on country characteristics and the type of debt. However, none of these options comes without political, economic, and social costs. Some options may ultimately be ineffective unless vigorously implemented. Policy reversals in difficult times have been common. The challenges associated with debt reduction raise questions of global governance, including to what extent advanced economies can cast their net wider to cushion prospective shocks to EMDEs.
format	Working Paper
author	Kose, M. Ayhan Ohnsorge, Franziska Reinhart, Carmen Rogoff, Kenneth
author_facet	Kose, M. Ayhan Ohnsorge, Franziska Reinhart, Carmen Rogoff, Kenneth
author_sort	Kose, M. Ayhan
title	The Aftermath of Debt Surges
title_short	The Aftermath of Debt Surges
title_full	The Aftermath of Debt Surges
title_fullStr	The Aftermath of Debt Surges
title_full_unstemmed	The Aftermath of Debt Surges
title_sort	aftermath of debt surges
publisher	World Bank, Washington, DC
publishDate	2021
url	http://documents.worldbank.org/curated/undefined/249451631308017450/The-Aftermath-of-Debt-Surges http://hdl.handle.net/10986/36279
_version_	1764484923377319936

The Aftermath of Debt Surges

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