02450cas a2200325 a 4500 AALejournalIMF022384 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513596259 1018-5941 BD-DhAAL BD-DhAAL Moreno Badia, Marialuz. Debt Dynamics in Emerging and Developing Economies : Is R-G a Red Herring? / Marialuz Moreno Badia, Juliana Gamboa-Arbelaez, Yuan Xiang. Washington, D.C. : International Monetary Fund, 2021. 1 online resource (38 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students In the wake of the COVID-19 pandemic, debt levels in emerging and developing economies have surged raising concerns about fiscal sustainability. Historically, negative interest-growth differentials in these countries have played a debt-stabilizing role. But is this enough to prevent countries from falling into debt distress? Drawing from a sample of 150 emerging and developing economies going back to the 1970s, we find that interest-growth differentials have remained relatively low, dampening debt increases in the run up to a crisis. But in the face of persistent primary deficits, debt service tends to rise abruptly-particularly in emerging markets-and a fiscal crisis ensues. There is also evidence that a large part of the debt build-up around crises stems from valuation effects associated with external debt and the materialization of contingent liabilities. These findings underscore that, though not necessarily a red-herring, low interest-growth differentials cannot fully offset the deleterious effects of large fiscal deficits, forex exposures, or hidden debts. Mode of access: Internet Debt Management imf Debt imf Fiscal Policy imf International Lending and Debt Problems imf Sovereign Debt imf Gamboa-Arbelaez, Juliana. Xiang, Yuan. IMF Working Papers; Working Paper ; No. 2021/229 Full text available on IMF http://elibrary.imf.org/view/journals/001/2021/229/001.2021.issue-229-en.xml IMF e-Library