The New York Times, Tue Jun 2, B3 ” Poor Countries Facing an Unparalleled Debt Crisis”
Once the dust settles, we expect the banks are going to get hit. 77 poor countries scheduled to make $62 billion payments on debts in 2020. While governments will stand behind banks as the Coronacrisis unravels, most banks will be left in a weaker position when this ends. I recommend that banks need to now begin to build capital (and cut balance sheets) from recent levels, take account of an expected increasing level of loan losses, not just from problems emerging to date but from risks of a possible “ credit crunch”, likely over the course of a developing economic down-turn. Here is one scenario how this may play out.