When the economy is going well, the poor benefit more than others. But when things are going badly, it is the poor who are hurt the most. This is especially true in the case of the Covid-19 pandemic, which has hit poor countries -- and the poorest people within them -- especially hard.
Some poor countries were facing economic difficulties before the pandemic, which intensified their troubles. Others were reasonably well managed, but suddenly faced the need for unanticipated expenditures. International support for this latter group can be highly productive. But for countries that already had big problems, financial assistance must be accompanied by economic-policy reforms if they are going to have any success.
Among heavily indebted countries with ill-advised economic-policy frameworks, Sri Lanka -- a middle-income country -- may currently be in the most trouble. Despite rapidly growing fiscal deficits and a foreign-exchange crisis that has caused severe shortages of food, medicine and fuel, Sri Lankan authorities long continued to insist that they would service their debts at all costs, rather than approach the International Monetary Fund for support.
