About this work
Domestic investors helped emerging markets finance large pandemic fiscal deficits, with foreign buyers and foreign currency issuance playing a smaller role in most economies. This April 2022 analysis explains how a more stable domestic investor base can ease credit and refinancing risks, while warning that government borrowing may displace private credit during recovery. Chile and Colombia stand out for using foreign currency debt and increasing dollarization.
Abstract
Domestic investors helped emerging markets finance large pandemic fiscal deficits, with foreign buyers and foreign currency issuance playing a smaller role in most economies. This April 2022 analysis explains how a more stable domestic investor base can ease credit and refinancing risks, while warning that government borrowing may displace private credit during recovery. Chile and Colombia stand out for using foreign currency debt and increasing dollarization.
Cite this work
Jonathan Fortun, Sergi Lanau (2022). Economic Views: EM Fiscal Deficit Financing. Institute of International Finance.