7 November 2023
Emerging markets are facing a severe debt crisis due to high US interest rates and a strong dollar, with 23% of these countries paying borrowing costs over 10 percentage points higher than US rates, up from less than 5% in 2019. This has pushed their debt service costs to the highest levels since 2010, leading to defaults in countries like Ghana and Sri Lanka and leaving others on the edge. High borrowing costs are squeezing economies, reducing access to international finance, and forcing governments to adopt austerity measures, which may stifle economic growth and exacerbate fiscal deficits.