In the latest of our macro webinar series, Francesca Beausang, Senior EM Economist Europe and Priscila Robledo, Economist Americas discuss EM Debt sustainability.
Bottom line: In terms of assessing future debt sustainability, the main indicator to focus on is the primary budget balance which would stabilize the debt. The latter depends on potential GDP growth and medium-term forecasts for inflation and yields. In much of the EM world, fiscal adjustments via higher taxes, lower expenditure or both will be required in the coming years to avoid a persistent indebtedness increase.