Emerging-Market Debt Crisis Brews as State Firms Need Rescue
- Indonesia, India, South Africa under pressure to bail out SOEs
- Fiscal deficits are already surging amid coronavirus pandemic
Electrical power lines hang from transmission pylons near an Eskom power station in Vereeniging, South Africa.
Photographer: Waldo Swiegers/BloombergThis article is for subscribers only.
Emerging-market economies are grappling with a new dilemma as they begin the slow journey to recovery: how to rescue state-owned businesses without also triggering a debt crisis.
Cash-strapped governments in Indonesia, India, South Africa and elsewhere are being pressured to bail out national airlines, energy utilities and other state businesses brought to their knees by virus-related travel restrictions, collapsing demand and plunging oil prices. The debt risk is putting credit rating companies on watch and prompting nervous investors to sell off assets before the situation gets any worse.