BEFORE the COVID-19 pandemic the small, middle-income developing economies of the Caribbean had been slowly but steadily emerging from their prolonged debt crisis. Now, thanks to COVID-19, their existing debt situation will worsen dramatically.

Reduced tax revenue and foreign exchange earnings, plus increased expenditure on public health and on the alleviation of poverty and unemployment triggered by the pandemic will create a serious fiscal problem. That, plus the inevitable drawing down of international reserves will require more borrowing in the short term.

No doubt, this debt crisis will require a special initiative for relief. This is because the debt is too small to threaten the viability of the global financial system and the terms for restructuring the debt by private lenders are not any more lenient as banks cannot afford concessions that even larger borrowers might ask for.

http://www.jamaicaobserver.com/editorial/just-as-the-caribbean-was-emerging-from-the-debt-crisis-_194816