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During 2021, the public debt outlook for developing countries and emerging markets continued to worsen due to the impact of the COVID-19 pandemic. The crisis drove up fiscal pressures and elevated financing needs, while weakening countries¡¯ capacity to service and repay public debt. In parallel, revenues declined given lower growth and trade limitations.

As a result of rising public debt levels and increased liquidity pressures, an increasing number of countries are at high risk or already in debt distress. As of end-January 2022, 58 percent of the countries covered under the Low-Income Country Debt Sustainability Framework (LIC DSF) faced a high risk of external debt distress or were already in debt distress. Full transparency around public debt data and debt restructuring operations is paramount in the wake of rising fiscal risks.