Almost three months into the global pandemic, the scorecards for most economies are in. The first quarter of this year was awful for just about every country in the world, even though most did not start responding to the challenge posed by COVID-19, through restrictions on movement, until mid-March. This latter reason is why most commentators are sure that output numbers for most economies will be worse this quarter than they were in the first three months of the year.
Do these support the view that once a vaccine or treatment is found for the virus, the global recovery will be a sharp one? Not much of that matters right now, given that the best-case timeline for a therapeutic breakthrough is by the third quarter of this year. Until then countries will remain challenged to keep the funding taps open in order that their economies are not completely submerged as it were. Nowhere is this difficulty more obvious than back home.
Recourse to the IMF’s Rapid Financing Instrument facility was thus inevitable. While we continue to debate whether the RFI is a loan or not it is fair to submit that Nigeria’s existing debt burden means that further external borrowing will not be easy, at least, commercially – both in terms of being readily available and affordable. Lebanon and Argentina’s recent debt defaults guarantee that financing conditions for emerging economies will be tougher over the next five years.
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