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Private-debt risks are hiding in plain sight

Debt moratoria provided temporary relief for private borrowers, but has it created a non-performing loan problem?

By

Carmen M Reinhart

and

Leora Klapper

There is still time to limit the damage, but this will require private- and public-sector actors to acknowledge the problem before it erupts into a full-blown crisis and to manage it effectively
There is still time to limit the damage, but this will require private- and public-sector actors to acknowledge the problem before it erupts into a full-blown crisis and to manage it effectively Photo: Getty Images

Carmen M Reinhart is chief economist of the World Bank Group; Leora Klapper is lead economist of the finance and private sector research team of the Development Research Group at the World Bank

When Russian tanks rolled into Ukraine, private-debt crises were probably already brewing — albeit hidden from view — in many parts of the world, as a result of the economic disruptions caused by the pandemic. Now, the war is pushing even more countries towards similar crises.

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