Averting Catastrophic Debt Crises in Developing Countries Extraordinary challenges call for extraordinary measures

CEPR Policy Insight No 104

Hamid Rashid, Joseph E Stiglitz

Developing economies are facing a severe debt crisis, exacerbated by the Covid-19 pandemic. If no action is taken to avoid a debt crisis in the developing world, the long-term effects on their public spending, employment and economic development will be staggering. What has been done, and even what has been proposed, is insufficient. It is critical, both from the perspective of the debtor countries and of the international community, that there be an orderly debt restructuring. Cooperation is needed from the private sector, which has not been forthcoming so far.