{"text":[[{"start":4.6,"text":"Emerging markets aren’t what they used to be. Just look at the rise of companies from developing countries such as China’s Alibaba, India’s Bharti Airtel or Brazilian fintech Nubank, all basically unknown to foreign investors at the time of the last financial crisis. Something else has changed too, and for reasons that are not unrelated: emerging markets’ vulnerability to debt crises."}],[{"start":28.6,"text":"Not long ago, a war in the Gulf would have led global investors to dump bonds from developing countries en masse. Yet an old-fashioned debt crisis has not happened, and not for any lack of debt. The government borrowings of 62 emerging markets tracked by the Institute of International Finance have doubled, relative to their GDP, since 2008. The $35tn total is six times what it was then."}],[{"start":54.7,"text":"Yet large debts today are much less destabilising than smaller sums were in the past. In the 1990s, turmoil in Mexico, Asia and Russia spread quickly across the developing world. Now, the IMF finds that “risk-off” events have just a fifth of the impact on emerging markets’ borrowing costs, and a sixth of the effect on portfolio outflows, as they did before the 2008 crisis. The impact on exchange rates has, on average, evaporated entirely."}],[{"start":85.80000000000001,"text":"Why is this? In many cases the answer is pro-market reform. Back in the 1990s, many discovered the benefits of central bank independence, floating exchange rates and sounder fiscal policies. Local capital markets bloomed, allowing some governments to curtail or end altogether their borrowing in “hard” currencies such as the dollar, and making the existence of some of those giant, aforementioned companies possible. "}],[{"start":null,"text":"
"}],[{"start":112.35000000000001,"text":"Not that all is well, exactly. Several low- and middle-income countries spend more than a quarter of their revenue on debt service, including Egypt and Pakistan. Should debts need restructuring, governments will try to protect local lenders by ensuring they get paid back in full, for fear of wiping out their domestic financial sectors. This leaves bilateral lenders — China is by far the biggest — and foreign bondholders facing a bigger share of the costs."}],[{"start":140.95000000000002,"text":"That sets the scene for frayed nerves, especially for low-income countries that are still exposed to shocks like those emanating from Iran. Lenders will argue that less well-off countries have already had enough debt relief. Borrowers can plausibly argue that lenders got a good deal overall, thanks to access to mineral resources and generous financial returns elsewhere."}],[{"start":163.8,"text":"The lesson to remember in such disputes is that reforms build resilience — as the IMF’s “risk-off” analysis shows — and sometimes that means giving emerging economies breathing space, while ensuring that all parties still broadly stick to their side of the bargain. When dealing with whatever emerging markets debt wobbles might happen, it’s important to be thankful for all the ones that won’t."}],[{"start":192.95000000000002,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1778819827_2505.mp3"}