We look for big increases or more modest increases if debt levels are already high. The IMF expects the highest increase in gross debt / GDP between 2020 and 2025 for Kuwait (+71 percentage points to 90 percent in 2025), Romania (+21 percentage points to 65%), Oman (+18 percentage points to 99%), South Korea ( + 17ppt to 65%), China (+ 16ppt to 78%), Chile (+ 15ppt to 48%) and Kenya (+ 12ppt to 79%). By contrast, Bahrain (+9 ppt to 137%), Brazil (+2 ppt to 104%) and South Africa (+6 ppt to 85%) recorded a more modest increase, albeit with already high debt levels.
In contrast, for Angola (-53 to 67 percent), Qatar (-30 percent to 38 percent), Pakistan (-18 percent to 69 percent), Serbia (-15 percent to 45 percent), Hungary (-14 to 63 percent , Ukraine (-14 to 52 percent), Ecuador (-13 to 56 percent), Ethiopia (-13 to 56 percent), Croatia (-12 to 76 percent) and Egypt (-10 to 77 percent) over the same time horizon.
It is important to emphasize that this is not set in stone and we believe that the IMF forecasts for EM countries that had increased their debt / GDP ratio in previous years are likely to reduce or stabilize their debt in the coming years tend to be overly optimistic.
Among the larger economies, Brazil and South Africa have their debt ratios at a high level (> 80%) with subdued growth even before the pandemic (average growth of 1.5% in each case or depends on the implementation of the reform. This also applies to the GCC oil exporters, with the oil price outlook adding an additional sensibility. Most started fiscal consolidation after the 2014-15 oil price collapse, but debt / GDP has nonetheless increased significantly over the past five years, with Bahrain and Oman on higher debt ratios and limited currency reserves are considered to be more vulnerable.
Finally, the IMF is optimistic for countries that have signed a loan agreement with the fund, including Angola (3.7 billion, to a lesser extent, Ecuador (6.5 billion USD 27-month EFF since September 2020) debt / GDP increased by 10-30 percentage points from 2015 to 2019, but is expected to decrease significantly over the next five years. However, we acknowledge that the IMF programs with Egypt (since 2016) and Ukraine (since 2015 a and off) resulted in a 15-30 percentage point decline in debt / GDP by 2019, while we had seen reform progress in Angola and Pakistan before the pandemic.