Can emerging market transitions survive Covid-19?

Credit rating downgrades are putting pressure on many developing economies, threatening the further progress of their energy transitions

Across the world, appeals are getting louder to ‘build back better’ and deploy once-in-a-generation stimulus packages to support sustainable development and cleaner energy value chains. But at the same time, policymakers in emerging markets (EMs) such as Turkey and India find themselves fiscally overstretched and having to assuage the concerns of creditors. While a weakening dollar in recent months has allowed EM dollar debt spreads to recover, it is unclear if, in the wake of the pandemic, governments will rein in clean-energy subsidies to balance the books. And, in addition, whether lenders will price in greater risk against power projects dependent on government solvency. Ratings agency F