Moody’s Investors Service said on Wednesday, India’s public debt levels are among the highest in emerging economies with the highest quantitative easing program, while its debt carrying capacity is the weakest.
Moody’s said, “With the exception of Chile, government effectiveness is weak in most of the 11 emerging markets, suggesting potential risks executing financial reforms or consolidation plans.”
“Credit potential varies widely with Ghana and India. [rated Baa3 negative] the weakest. Apart from the 11 emerging markets, India, South Africa and Ghana have the highest public debt and weakest debt carrying capacity, ”the agency said.
“The RBI’s program aims to stabilize the domestic bond market,” the report titled, ‘Quantitative easing programs are largely positive, but risks vary across economies’.
The report states, “While the bank does not operate in the primary market, the dividend payment and transfer of excess reserves to the government fund of budget deficits.”
“The bank has targeted to buy more than illion 3 trillion [$41.3 billion] The government has added this bond to the “Moody’s Report” after the bonds bought 3.1 trillion bonds in the last fiscal year. He said the debt burden of most economies would increase before the next few years stabilized.
Depending on the recovery prospects and future debt servicing costs, higher debt levels may be unstable for more vulnerable economies, ”the report warned.
While the QE operations of central banks had largely achieved the objective of stabilizing bond markets and providing market liquidity, the rating firm said that it simply eased out the monetary stimulus provided during the epidemic of all emerging markets as central. It will be difficult for banks.
“With the exception of the Philippines, Indonesia and Ghana, most emerging market central banks have not yet announced the maximum purchase nor a clear time frame for their programs. As such, there is a risk that central banks will not taper these programs after meeting their primary objectives, unless they are supported by a strong fiscal policy framework, ”adding that advanced economies have also on this front Introduced some successful models.
Add Comment