Evolution of Debt and Deficit in BRICS Countries: Covid-19 Shock and Post-Covid Prospects

D. K. Srivastava (), Muralikrishna Bharadwaj (), Tarrung Kapur () and Ragini Trehan ()
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D. K. Srivastava: EY LLP India
Muralikrishna Bharadwaj: EY LLP India
Tarrung Kapur: EY LLP India
Ragini Trehan: EY LLP India

A chapter in Studies in International Economics and Finance, 2022, pp 365-388 from Springer

Abstract: Abstract In this paper, we have analysed the evolution of government debt relative to GDP in the BRICS economies with a view to highlighting the impact of Covid and the related surges in fiscal deficits as part of fiscal stimulus on their sustainability profiles. We have highlighted the roles played by the contribution made by primary balance and the excess of growth over interest rates in the evolution of the debt-GDP ratios of these countries. We have also estimated sustainability thresholds for India and South Africa using a threshold estimation procedure. All BRICS countries except China have explicit fiscal responsibility legislations. However, the relevant norms have been thrown out of gear due to the impact of the Covid. In fact, India, Brazil and South Africa had sustainability issues even prior to the onset of Covid. China may also face sustainability issues in the post-Covid years. Russia is the only country amongst the BRICS countries which may be spared of these issues. Brazil, India and South Africa may need a persistent effort to reduce primary deficits and uplift growth rates after their economies normalize once the Covid-related issues have been overcome.

Keywords: Government debt sustainability; Covid impact; BRICS; Fiscal responsibility legislations; Primary balance; Debt sustainability threshold (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isbchp:978-981-16-7062-6_20

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DOI: 10.1007/978-981-16-7062-6_20

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