With its empty streets and shuttered businesses, the ‘city that never sleeps’ has been on pause since a COVID-19 lockdown came into effect in mid-March. Yet every night at 7 pm, New York City springs back to life as people take to their balconies, windows and rooftops clapping, cheering, and singing. The same scene plays out in London every Thursday, as it does across Spain, Italy, Republic of Korea, Colombia, India, Peru and many other places across the world.
Even before the onset of the COVID-19 pandemic, many developing countries were at high risk of debt distress. These risks have now materialized. Help has been extended with partial suspensions of debt service to 76 low-income countries, and the IMF has offered debt service relief to 25 of the poorest countries. But these actions do not cover commercial and multilateral debt. Nor do they protect middle-income countries. More action is urgently needed to avoid defaults.