Emerging Europe's debt refinancings loom

Published: October 3, 2009

There is a danger of a "weak, jobless recovery" from the crisis in emerging Europe, says Philippe Le Houérou, the World Bank's vice-president for Europe and Central Asia.

Opening a briefing at the IMF / World Bank meetings in Istanbul, Le Houérou said that the refinancing needs of emerging Europe – combined with central Asia – are higher than those of any other region "by a long shot"; some US$350 billion of foreign debt will mature during 2010.

"As the impact of the stimulus packages dissipate at the global level, the private sector will need to take over as the engine of economic recovery and growth," he added.

Although troubles for banks are easing, he said, "families are now the ones under severe stress as they see breadwinners lose their jobs and have trouble paying their bills." Unemployment in Europe and Central Asia has already risen to 11.4 million from 8.3 million in 2008, he added, while poverty is also increasing.

Le Houérou referred to the financial crisis as a "heart attack", adding that "the patient is slowly recovering" and that "much of the world is getting good economic news this autumn". The question, he said, is how long that recovery will be.