The book chapter “Challenges of Public Financial Management During the Covid-19 Pandemic: Caveats for Developing Countries” on the effects of Covid 19 on the finances of developing countries, of which C. Kemal CAN is among the authors, was published by Peter Lang Publishing.
The results of CAN’s study as summarized in the book chapter underline the fact that COVID-19, which turned into an economic pandemic rather than a contagious viral disease in just a few months, is currently a major obstacle to economic activity worldwide. However, the study highlights that unlike developed and industrialized countries, developing and emerging economies are more prone to financial turmoil, as their already shallow financial resources are often well below the level required to meet the urgent financial needs arising from COVID-19. In this context, the study presents some warnings that can be taken into account in order to facilitate the transition from the current disturbing conditions to the recovery for these countries. Measures such as the use of complementary budget and/or external financing and reducing the obstacles of the judiciary and bureaucracy are included in the study as policy recommendations that can be applied in this process. According to the author, the operational capability of the government under the difficult conditions imposed by the pandemic largely depends on the availability of liquidity when needed, and also, foreign exchange reserves are often not abundant in developing countries and these countries often suffer from large amounts of foreign currency debt, and countries with relatively fragile economies such as Turkey and Romania. Debt levels have already risen and financing additional expenditures has become more expensive for these countries. The author also draws attention to the fact that the decrease in oil prices is replaced by an increase, and warns that inflationary pressures will increase, and the lowering of interest rates and the announcement of monetary expansion measures by some developing country central banks as suggestions to reduce the possibility of pressure.