Emerging market economies are particularly vulnerable to food, fertiliser and energy supply chain bottlenecks, as well as inflation leading to rising debt servicing costs while demand slows. This puts these exposed countries into acute debt servicing strains. Sri Lanka is the most prominent, but many others will follow. This is not a liquidity crisis but a solvency crisis, which requires an internationally coordinated debt restructuring programme. There are encouraging signs that China might be gradually falling in line with international practices in renegotiating loans to EMs.
Sri Lanka crisis shows why reserves matter By Nikhil Sanghani Sri Lanka has been thrust into the limelight after plunging into political and economic crisis. Foreign exchange reserves have been depleted and the country is embroiled in a messy public debt default. There are lessons here for other countries.
MEETINGS Prospects for emerging markets Tuesday 6 September, Broadcast Ayhan Kose, chief economist and director of the prospects group in the equitable growth, finance and institutions practice group of the World Bank, joins Mark Sobel, US chair, OMFIF, for a discussion on the global macroeconomic outlook.
ON DEMAND Craving – rather than fighting – inflation Japan’s quantitative easing will have to continue with policy rates suppressed, leaving the ministry of finance reliant on the Bank of Japan as its monetary agent. OMFIF’s chief economist, Neil Williams, covers the issues with Taylor Pearce, economist at OMFIF.
LATEST REPORT Sustainable Policy Institute Journal In the summer edition of the journal, contributors lay out why the ‘S’ in ESG is becoming a priority for investors and why social and human rights issues are taking centre stage.
