One of the three major rating agencies in the world, Moody's, has scrutinized five countries that investors believe could be classified as emerging European economies: the Czech Republic, Poland, Hungary, Russia and Turkey. In a report on the budgets of local and regional authorities in the face of the coronavirus pandemic, analysts said that they would be burdened with deficits and debt in 2020, but that they would stabilize in 2021.
The crisis caused by the coronavirus will cause the financial needs of local governments in the five countries to exceed €25 billion in 2020. Poland accounts for €7.2 billion, which is the second highest amount after Russia (€11.7 billion).
But according to Vladlen Kuznetsov, vice president and senior analyst at Moody's, co-author of the report, this year will be a financial shock for local governments, but "they will be able to recover from it thanks to a combination of fiscal flexibility, low debt burden and low refinancing risk."
According to Moody's, of the five analyzed countries, Poland and Turkey are the most vulnerable to a prolonged crisis. In the case of Poland, the reason is moderate efficiency, and in Turkey – high level of debt.