Hidden Debt : Solutions to Avert the Next Financial Crisis in South Asia (English)

The COVID-19 (coronavirus) crisis has expanded public direct interventions through state banks and enterprises to aid economies, but with possible risks to debt sustainability, long-term productivity, and equality. The ongoing COVID-19 crisis, which has sent economies in South Asia and other parts of the world into a deep recession, has created the need for public relief efforts. It has also raised South Asia's debt levels and has also raised South Asia's debt levels and future contingent liabilities. This once-in-a-century shock and the subsequent vast deployment of public resources have come on the back of the debt wave that has formed over the past decade. Large amounts of debt obligations are likely to resurface for central governments as many troubled state-owned enterprises (SOEs) and state-owned commercial banks (SOCBs) will call for the support through bailouts. Prematurely terminated public-private partnerships (PPPs) may require large public payments as settlements. Increased leveraging of SOEs, SOCBs, and PPP interventions during the COVID-19 crisis must be safeguarded against possible exploitation by elites for their own benefit and must minimize misallocation of resources in the economy that could reduce productivity in the medium to long ter. On balance, PPPs have yielded more successes than problems compared with SOCBs and SOEs. Some PPPs in South Asia have been highly successful in terms of both public benefits and private returns.