Public Domain<\/a><\/em><\/p>\nThese types of adverse conditions are outlined both in the difficulty of financing their economies and in the weak external demand for their exported products, while developing economies based on the export of raw materials (e.g. oil-producing countries) will experience lower prices for these exportable raw materials and their goods in general.<\/p>\n
At the same time, in order to reduce the negative economic consequences left behind by the treatment of the pandemic and always after its expiry, the governments of developing economies will have to drastically increase their external and internal borrowing respectively in order to finance with a sufficient level funds the strengthening of their countries’ healthcare systems and to finance the maintenance and upgrading of important public infrastructures.<\/p>\n
Such public infrastructures that accelerate the growth rates of an economy and which will bravely require funding for their maintenance and upgrading are the road and rail networks, airports and ports of a country.<\/p>\n
In addition, other critical infrastructures that will need upgrading are the energy and communications sectors, without over acknowledging the fact that the social protection sector will re-require brave funding until unemployment rate to reduce in normal levels.<\/p>\n
All these structural fiscal policies will lead the governments of developing economies to decide to forcibly to spark budgetary deficits in their countries’ state budgets as well as their existing levels of public debt.<\/p>\n
Trust Economics predicts that the fiscal deficits of developing economies will increase compared to 2019 and with a level of growth of between 80%-60%. At the same time, the public debt of the governments of developing countries will show a medium-weighted increase of 12%-15% of their GDP compared to 2019 levels.<\/p>\n
For oil-producing countries such as Saudi Arabia, which in addition to the collapse in global demand for oil has been embroiled in an oil price war with Russia over the global market share of American shale oil companies, it has already revised its annual state budget for 2020, reducing its public spending by $13bn.<\/p>\n
The fall in the price of oil from $70 per barrel to $30 per barrel has already caused a 12% drop in the GDP of oil-producing countries in the Persian Gulf. While the nightmarelike prospect of the oil price slipping close to $10 per barrel will create tragic fiscal problems in all these countries.<\/p>\n
Moreover, the fall in crude oil exports led to a postponement of Saudi Arabia’s \u201cSaudi Vision 2030\u201d program, which was intended to turn the country’s economy into less dependent on crude oil exports. The outlook now for Saudi Arabia is bad given that the budget deficit in its state budget will rise to 13% of GDP in 2020 from 4,5% of GDP in 2019.<\/p>\n
For other oil-producing countries, Trust Economics predicts a drastic increase in their budget deficit to around 8% from 1% in 2019.<\/p>\n
What the governments of developing economies will have to do is to prepare very well for the day after the end of the pandemic and the return of the economy to normality so that any funding raised is used in a rational and fiscally responsible manner.<\/p>\n
At the same time, the projects to be financed should demonstrate at every stage the effectiveness of their financing. This will only be achieved by framing these projects with qualitative and quantitative factors corresponding to measure this effectiveness in practice in the performance of funding and regardless of whether these projects financed concern healthcare systems, critical public infrastructure and services and\/or social protection systems.<\/p>\n
On the other hand, The United Nations Conference on Trade and Development (UNCTAD) (www.unctad.org<\/a>) proposed the \u00a0write-off of a $1trillion \u00a0debt \u00a0owed \u00a0by \u00a0developing \u00a0countries. \u00a0High-income developing countries have debt servicing obligations of between $2-$2,3trillion for 2020-2021 alone, while middle and low-income countries have debt servicing obligations of between $700bn-$1.1trillion.<\/p>\nWhat is certain is that a combination of our proposed fiscal policies combined with debt relief will help the developing world pass without problems the economic consequences of the Covid-19 pandemic (Coronavirus).<\/p>\n
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The world’s most vulnerable economies, the developing economies, which, before the crisis caused by the Covid-19 (Coronavirus) pandemic, were already vulnerable to external shocks while carrying relatively high budgetary deficits in their state budgets and high public debt, are also the ones that will face the worst problems left behind by tackling this pandemic. by … <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18,6],"tags":[111,155,121,98,149],"class_list":["post-353","post","type-post","status-publish","format-standard","hentry","category-forecasting","category-publications","tag-developing-economies","tag-fiscal-deficit","tag-public-debt","tag-public-sector-expenditures","tag-wti-crude-oil-per-barrel"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/353","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/comments?post=353"}],"version-history":[{"count":4,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/353\/revisions"}],"predecessor-version":[{"id":357,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/353\/revisions\/357"}],"wp:attachment":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/media?parent=353"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/categories?post=353"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/tags?post=353"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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