A report issued by the credit rating agency, Moody's, showed that a number of countries in emerging and sub-emerging markets, such as Kuwait, depend to varying degrees on goods or tourism, it is likely to see significant annual declines in fiscal revenues.
According to the agency, the sharp recovery in global financial markets, following a period of unprecedented turmoil, this was a precedent for stabilizing production or low rates of infection with the Coronavirus in many emerging and frontier market economies.
According to the report, the unprecedented economic shock hit low-rated governments more severely, leading to widening financial and external imbalances. At a time when emerging and sub-emerging markets witnessed an economic shock through multiple channels, including the decline in export values, as a result of lower commodity prices, weak tourism and reduced global demand, plus fluctuations in non-resident capital flows, indicating that the macroeconomic pressures added other tensions at the financial and external levels. In severe cases, liquidity pressures rose towards serious stress or a deficit, at a time when some governments in emerging and sub-emerging markets benefited from emergency financing, significant financial support by international financial institutions and the formal sector was partly financing the financial and external gaps.
Source (Al-Rai Kuwaiti newspaper, Edited)
