Asias lower-income countries: concessional public debt, concessional rescues

In 2019, the debt wave that began in 2010 was coming to an end. Many developing countries were experiencing increasing difficulties to service and refinance their debts. Developing Asian countries were no exception. As their debt profile deteriorated, they faced uncertain growth prospects and needed to correct accumulated fiscal and current account imbalances, all pointing to an escalating risk of debt distress. And then the coronavirus disease (COVID-19) outbreak took the world by surprise with enormous economic and social consequences. This chapter draws lessons from previous debt crises to provide a framework for discussing potential solutions for developing Asian countries. It emphasizes the need to link short-terms solutions to medium- and long-term debt sustainability to build more robust systems that avoid the pitfalls of past debt crises while providing predictable sources of financing for sustainable development.