Debt-distressed countries more likely to turn to non-traditional bailout options, according to WTW’s political risk index

Rhea-AI Summary

WTW (NASDAQ: WTW) releases Political Risk Index report detailing escalating debt crisis in emerging markets due to high government expenditures during the pandemic, global inflation, and increased interest rates in 2023. The report highlights potential protests linked to austerity, vulnerability of countries with high public interest payments to revenue ratio, complicated sovereign debt restructuring, and the impact of climate change on debt sustainability. Evan Freely, Global Head of Financial Solutions at WTW, emphasizes the risks of less transparent short-term financing and geopolitical complications.

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• High government expenditures during the pandemic, global inflation, and increased interest rates contributing to an escalating debt crisis in emerging markets
• Potential protests linked to austerity on the rise particularly in low-income countries
• Countries with high ratio of public interest payments to public revenue most vulnerable to sovereign debt crises in near to medium term
• Geopolitics complicating an already difficult situation, increasing humanitarian and business risks

LONDON, Nov. 29, 2023 (GLOBE NEWSWIRE) -- High government expenditures during the pandemic, coupled with global inflation and increased interest rates in 2023, have contributed to an escalating debt crisis in emerging markets. This is according to the latest Political Risk Index report released by WTW (NASDAQ: WTW), a leading global advisory, broking, and solutions company.

The report details how political challenges may make it increasingly difficult for multilateral institutions, including the International Monetary Fund (IMF) and the World Bank, to play their traditional crisis management roles, which could heighten the political and economic risks associated with debt crises. Other findings include:

• Cuts in government spending are likely to trigger protests linked to austerity, which are already on the rise particularly in low-income countries
• Countries with a high ratio of public interest payments to public revenue may be most vulnerable to sovereign debt crises in the near to medium term
• Partly because of intensified geopolitical competition, the politics of sovereign debt restructuring following debt crises have become increasingly complicated with countries more likely to turn to non-traditional bailout options as a result
• Climate change is likely to become an increasingly important driver of crises of debt sustainability, necessitating reform of the international debt and financial architecture

Evan Freely, Global Head of Financial Solutions, WTW, said: “A conveyor belt of economic shocks has hit the world’s most vulnerable countries hard. Emerging market governments may look for less transparent short-term financing, accepting higher interest rates in return for fewer conditions, however this increases both humanitarian and business risks. This report indicates that geopolitics is complicating an already difficult situation, and these trends should be carefully monitored from a risk management perspective.”

This edition of the WTW Political Risk Index features research conducted by the geopolitical consultants at Oxford Analytica and the credit insurance group Credendo, as well as WTW’s trade credit and political risk teams. The complete report can be downloaded here.

About WTW

At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.

Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.

Learn more at wtwco.com.

Media contact

Sarah Booker: +44 7917 722040
Sarah.Booker@wtwco.com

What is the latest report released by WTW (NASDAQ: WTW)?

The latest report released by WTW (NASDAQ: WTW) is the Political Risk Index report detailing the escalating debt crisis in emerging markets.

Who is the Global Head of Financial Solutions at WTW (NASDAQ: WTW)?

Evan Freely is the Global Head of Financial Solutions at WTW (NASDAQ: WTW).

What are some potential risks highlighted in the report by WTW (NASDAQ: WTW)?

The report highlights potential protests linked to austerity, vulnerability of countries with high public interest payments to revenue ratio, complicated sovereign debt restructuring, and the impact of climate change on debt sustainability.

What are the key factors contributing to the escalating debt crisis in emerging markets according to the report by WTW (NASDAQ: WTW)?

The escalating debt crisis in emerging markets is attributed to high government expenditures during the pandemic, global inflation, and increased interest rates in 2023.

Where can the complete report by WTW (NASDAQ: WTW) be downloaded?

The complete report can be downloaded from the provided link.