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How to Prevent the Looming Sovereign-Debt Crisis

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31.07.2020

NEW YORK – While the COVID-19 pandemic rages, more than 100 low- and middle-income countries will still have to pay a combined $130 billion in debt service this year – around half of which is owed to private creditors. With much economic activity suspended and fiscal revenues in free fall, many countries will be forced to default. Others will cobble together scarce resources to pay creditors, cutting back on much-needed health and social expenditures. Still others will resort to additional borrowing, kicking the proverbial can down the road, seemingly easier now because of the flood of liquidity from central banks around the world.

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