Governments need to strategically use financing opportunities while safeguarding their economies from the risks of runaway debt and poor debt management.

A rosier post-pandemic economic outlook for advanced economies is supported by the faster pace of vaccines being rolled out compared to developing countries, as well as stronger proactive fiscal responses being deployed now and in the future.

But why aren't developing and emerging economies opening their purses enough to shore up their economies, despite suffering from the economic impact of the pandemic no less than their advanced peers? Developing countries are facing severe economic and social damage due to the sheer size of informal economies with vulnerable, low-income workers who cannot enjoy the luxury of work from home arrangements, and face poor hygiene and healthcare conditions.

While advanced economies recorded large increases in fiscal deficits in 2020, developing countries' fiscal responses have been much more constrained.

A version of this article appears in the print on March 24, 2021, of The Himalayan Times.