The coronavirus pandemic has exacerbated the problem of public debt in many countries: 2020 was a record year in many years for the number of sovereign defaults.
This year the number of bankruptcies may increase: the probability of default is high in Pakistan, Cameroon, Angola, Kenya, Ukraine and Turkey. At the same time, European countries, as well as Japan and the United States, which can pay off their debts without damaging their balance sheets, will survive the current crisis with the least losses.
The pandemic is clearly not helping to mitigate the problem of the state debt, says Andrey Kochetkov, leading analyst at Otkritie Broker for global research. The risks of external liabilities remain for those countries that faced financial difficulties even before the pandemic.
In the United States, without the participation of the Federal Reserve System, a default can also occur, but the Fed is actively financing the budget deficit, which in 2020 exceeded Russia’s GDP. In Japan, the central bank is also taking on a colossal debt.
The Federal News Agency previously reported that the International Monetary Fund (IMF) reminded Ukraine of the amount of debt payments in 2021.