For Investing More In Health Care During The Pandemic – Credit Ratings Are Punishing Poorer Countries
Ramya Vijaya, Stockton University
Economic recovery from the COVID-19 pandemic depends on sustained investment in health care and social services. But while rich countries like the U.S. can borrow and spend relatively easily, low-income nations face a major obstacle: their credit ratings.
A credit rating, like a credit score, is an assessment of the ability of a borrower – whether it’s a company or a government – to repay its debts. Lower credit ratings drive up the cost of borrowing.
This threat prompted some poorer countries to avoid tapping investors for vital financing during the pandemic, while other governments that made plans to spend more on public services were hit with credit ratings downgrades from private companies.
My forthcoming research shows that when credit ratings fal...