The article analyzes the key aspects of the debt burden, which has taken on an unprecedented scale in the economies of developed and developing countries. The coronavirus pandemic has led to a significant increase in government support for households and companies, while the volatility of global financial markets has increased. Given the continuing uncertainty about the further recovery of the global economy, the timing of countries’ return to pre-crisis levels of borrowing remains unclear. At the same time, we note a growing mismatch between risk assessments in financial markets and the expected outlook for economic recovery. Central banks of countries have taken unprecedented measures to counter the growth of debt burden, but in developing countries, the limited fiscal space does not allow effective measures to prevent the continued growth of debt. The article also notes that the cheapness of new loans is an aggravating factor in the growth of borrowings and the deterioration of the balance of payments. The author came to the conclusion that a sharp increase in public debt in many countries will preserve the vulnerability of the world economy, therefore, it is necessary to carefully adjust the fiscal policies of the countries of the world, modernize fiscal risk management strategies and modernize tax reforms. In addition, in conditions of high debt, approaches to assessing the risks of attracting foreign direct investment are changing, which in the future will have a significant impact on the redistribution of international capital flows. However, even in the face of excessive debt burden, governments need to continue lending support to households and companies in shortterm policies, in parallel with measures to manage capital outflows and achieve exchange rate flexibility.
Can COVID-19 induce governments to implement tax reforms in developing countries?