Western Balkans citizens legally resident in EU equal to 14% of region’s population
International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Alexei Navalny arrested on arrival as he returns home
LONG READ: The oligarch problem
Opposition activist Navalny's call for mass protests a success as thousands take to the streets across Russia
Russia's National Welfare Fund accounts for almost 12% of GDP
Police arresting activists ahead of Saturday’s demonstration in support of Navalny
Biden seeking a five-year extension to START II missile treaty
Western Balkans and Ukraine urged to scrutinise coal subsidies
Oligarchs trying to derail Ukraine’s privatisation programme, warns the head of Ukraine’s State Property Fund
Private finance mobilised by development banks up 9% to $175bn in 2019
VISEGRAD BLOG: Central Europe's populists need a new strategy for Biden
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Czech MPs pass protectionist food law in violation of EU rules
M&A in Central and Eastern Europe fell 16% in value in 2020, says CMS report
Hungarian vehicle makers hit by supply chain shortage
COVID-19 and Trump’s indifference helped human rights abusers in 2020
OUTLOOK 2021 Poland
OUTLOOK 2021 Slovakia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
FDI inflows to CEE down 58% in 1H20 but rebound expected
Albania needs reforms for e-commerce to thrive, says World Bank
BALKAN BLOG: US approach to switch from quick-fix dealmaking to experience and cooperation
Corona-induced slump in global clothing sector dragged down Albania’s 2020 exports
Bosnia's exports in 2020 amounted to BAM10.5bn, trade deficit to BAM6.3bn
Retailers and restaurant owners threaten protests in Bulgaria if reopening is delayed
Bulgaria's Biodit first company to IPO on new BEAM market
Bulgaria’s government considers gradual easing of COVID-related restrictions
Spring lockdown caused spike in online transactions in Croatia
ING: Growth in the Balkans: from zero to hero again?
Labour demand down 28% y/y in Croatia in 2020
EBRD investments reach record €11bn in pandemic-struck 2020
OUTLOOK 2021 Moldova
Storming parliaments: New Europe's greatest hits
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Montenegrins say state administration is most corrupt institution
North Macedonia plans to cut personal income tax in IT sector to zero in 2023
Romania government to pursue “ambitious” timetable for justice reforms
OUTLOOK 2021 Romania
OUTLOOK 2021 Slovenia
Slovenia’s opposition files no-confidence motion against Jansa cabinet
Slovenia’s government to release funds to news agency STA after EU pressure
UK Moneyhub picks Slovenia for post-Brexit European base
D’S Damat franchise deals ‘show Turkey’s hard-pressed mall operators becoming their own tenants’
Turkey’s benchmark rate held as concerns over faltering recovery come to fore
Turkish lira breaches HSBC’s stop-loss, Turkey ETF signalling outflows
CAUCASUS BLOG : What can Biden offer the Caucasus and Stans, all but forgotten about by Trump?
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Armenia
COMMENT: Record high debt levels will slow post-coronavirus recovery, threaten some countries' financial stability, says IIF
OUTLOOK 2021 Georgia
Iran’s Khamenei menaces private citizen Trump with image of aircraft shadowing blond golfer
Iran’s technology minister indicted for failing to properly implement internet censorship
No US move to rejoin Iran nuclear deal imminent, say Biden national security nominees
TEHRAN BLOG: Will Biden bet on a quick return to the Iran nuclear deal?
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
Mongolia's PM quits amid protests over treatment of mother with coronavirus and newborn baby
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
OUTLOOK 2021 Tajikistan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
Download the pdf version
Challenges are coming for those countries which have overly relied on commodity exports and tourism, resulting in weaker fiscal revenues and current account balances.
Aside from significant socioeconomic challenges and the negative economic impact, many emerging market countries have relied on portfolio flows. With the onset of the crisis, inflows we have seen over most of 2019 suddenly turned into hefty outflows, with investors having removed $83bn up to 23 March, according to the IMF. Further challenges come for those countries that have overly relied on commodity exports and tourism, resulting in weaker fiscal revenues and current account balances.
Why have concerns on public debt sustainability and external vulnerabilities risen?
The policy space to support the economy differs hugely across emerging markets and it is here that we also look at public debt sustainability. Notably, we expect a spike in public debt ratios, as many countries will run higher fiscal deficits (lower revenues and higher spending) while growth is coming in much lower.
There are two additional pressure points worth mentioning: First, financing costs are increasing to reflect a higher risk premium, stretching budgets further. Second, many emerging market governments have borrowed in FX. With EM currencies having come under pressure recently (-9% based on JP Morgan EMCI), the local currency value of FX-debt outstanding and debt service is increasing.
Where do we see signs of sovereign debt distress?
Since the start of the year, the amount of EM $-denominated bonds trading above 10% yield has more than doubled from around $90bn (10% of bonds outstanding) at the start of the year to currently $190bn (21%). Many of those have been hit hard by the commodity price shock, while for others, the current crisis exacerbates already weak public debt sustainability. For now, concerns are concentrated around frontier markets rather than larger emerging market economies. Based on market pricing, we find signs of debt distress for Angola, Argentina, Ecuador, Gabon, Lebanon, Sri Lanka, Suriname, Tajikistan and Zambia, as well as to a lesser extent for Ghana, Iraq, Nigeria and Oman.
Where could relief come from?
The IMF and World Bank have set up emergency funding programmes of $50bn and $12bn respectively, with more on the way. Both institutions have also issued a joint statement calling for debt payment suspensions from bilateral creditors for World Bank IDA countries, with an invitation to G20 leaders to make assessments and an endorsement sought by the 16/17 April virtual Spring Meetings. On the one hand, multilateral support and debt relief could ease the pressure for some sovereigns, while on the other hand, there is a risk that private sector investors will be asked to bear a share of the burden.
Leaving debt distresses aside, what else is important to watch?
Over the last week, rating downgrades have come through, mainly affecting commodity producers as fiscal and external vulnerabilities increase. However, we have also found a large divergence in those, with some Middle Eastern and CIS sovereigns boasting strong buffers (Azerbaijan, Kazakhstan, Kuwait, Qatar, Russia, Saudi Arabia and the UAE), while others are more vulnerable (including Angola, Nigeria and Oman). Among the larger emerging market economies, Mexico and South Africa were also downgraded mainly on lower growth prospects in the former and public debt sustainability concerns in the latter.
here to continue reading this article
and 5 more for free or purchase
12 months full website access including
the bne Magazine for just $250/year.
Register to read the bne monthly magazine for
Password could contain only
and have 8-20 symbols length.
Please complete your registration by confirming your
A confirmation email has been sent to the email
address you provided.
can't be empty.
No user with
this email address.
Access recovery request has expired, or you are using
the wrong recovery token. Please, try again.
Access recover request has expired.
Please, try again.
To continue viewing our content you need to complete
the registration process.
Please look for an email that was sent to
with the subject line
"Confirmation bne IntelliNews access". This email will have
instructions on how to complete registration
process. Please check in your "Junk" folder in
case this communication was misdirected in your
If you have any questions please contact us at email@example.com
Sorry, but you have used all your free articles fro
this month for bne IntelliNews. Subscribe
to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free
digital weekly newspaper to subscribers to
the online package.
Click here for more subscription options,
including to the print version of our
flagship monthly magazine:
Take a trial to our premium daily news
service aimed at professional investors that
covers the 30 countries of emerging
For any other enquiries about our
products or corporate discounts please
contact us at
If you no longer wish to receive
Magazine annual print
Website & Archive
Combined package: web
access & magazine print
Take a trial to our premium daily news service
aimed at professional investors that
covers the 30 countries of emerging Europe: