Coronavirus could cause more countries to default on their debt, economist say

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• An increasing number of countries could default on their debt in the coming 12-18 months as governments globally increase spending to limit the economic damage from the coronavirus pandemic, said Simon Baptist, global chief economist at The Economist Intelligence Unit. The International Monetary Fund on Tuesday downgraded its economic forecasts, saying that it now expects the global economy to shrink by 3% this year – compared to its previous projection for growth of 3.3%.  
• Many governments have announced large amounts of stimulus to support their respective economies, with some taking up more debt to fund those expenditure. The U.S. has raised its issuance of Treasury securities, while the usually fiscally conservative Germany said it plans to increase borrowing by as much as 150 billion euros ($164.4 billion).  But Baptist said not all governments could get the funding that they seek. In particular, he said those in emerging economies would face “a big challenge” in convincing international investors to lend them more money at a time when investors are seeking safer places to park their funds.“A lot of emerging markets are reliant on international investors, international financial flows to get the funding to run a budget deficit, they find it harder to borrow in local currency — although there are a few exceptions,” said the economist. “At the moment, with this big turn to risk aversion in international markets, even though there may be some emerging world governments that would like to spend more, they’re not going to be able to get funding.”  
• https://www.cnbc.com/2020/04/15/coronavirus-more-countries-could-default-on-debt-economist-says.html
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