Frontier market sovereign debt fears on the rise

Sovereign balance sheets in most of the large emerging economies are in reasonable shape, but those in a few of the smaller Frontier Market economies are very fragile. And investors’ concerns have ratcheted up in recent weeks. The political importance (and small size) of these economies mean that they should continue to receive external support, either from the IMF or neighbouring countries, mitigating some of the risks. However, Lebanon is one country where sovereign default risk seems high.