Global | “Earn it!” What price fiscal reputation in emerging markets?

Emerging Markets’ reputations for delivering on fiscal commitments has never been so important as it is now, given the need for medium-term adjustment in the Covid crisis aftermath. We reveal where markets may be underplaying the importance of reputation based on EMs’ fiscal adherence over the last 10 years.

In this report you will learn:

• Fiscal authorities everywhere took an easy decision to provide huge support in the face of desperate economic circumstances. But promises are cheap. It’s much easier to project a multiyear retrenchment than to stick to it, given massive fiscal needs and political upheaval in many EMs.
• Judge me by my actions. We’ve developed fiscal reputation scores for 28 EMs and 36 frontier markets based on 10 years of fiscal balance outcomes relative to authorities’ plans. We believe they’re the first measures of this fundamental tenet of sovereign trust.
• Our assessment reveals Russia, Serbia, Croatia, and Poland deserve the best fiscal reputation based on adherence to projections. Egypt, Uruguay, South Africa, and Turkey the worst. Among frontier markets, Belarus, Azerbaijan, and Iraq have the best reputation. Bahrain, Ghana, and Kenya the worst.