On October 11, 2021, World Bank (WB) in its report titled ‘International Debt Statistics 2022’ warned against a 12% debt rise of the world’s low-income countries to $860 billion in 2020 due to the COVID-19 pandemic. The report called for urgent efforts to reduce debt levels.
Key Points:
i.Half of the world’s poorest countries were in external debt distress or at high risk of it.
ii.The external debt stocks of low- and middle-income countries combined raised 5.3% in 2020 to $8.7 trillion.
iii.The rise in external debt surpassed gross national income (GNI) and export growth, with the external debt-to-GNI ratio, excluding China, rising five percentage points to 42% in 2020.
- Their debt-to-export ratio surged to 154% in 2020 from 126% in 2019.
iv.Net inflows from multilateral creditors to low- and middle-income countries rose to $117 billion in 2020, the highest level in a decade.
v.Net lending to low-income countries rose 25% to $71 billion, also the highest level in a decade, with the IMF and other multilateral creditors providing $42 billion and bilateral creditors $10 billion.
Point to be noted:
G20(Group of Twenty) and Paris Club of official creditors launched a Common Framework for Debt Treatments in 2020 to restructure unsustainable debt situations and protracted financing gaps in DSSI (Debt Service Suspension Initiative)-eligible countries, but only three countries – Ethiopia, Chad and Zambia – have applied thus far.
- DSSI is G20’s imitative which offered temporary deferral of debt payments. Its going to expired soon.
Recent Related News:
The World Bank released the updated Groundswell report “Groundswell Part 2: Acting on Internal Climate Migration” on 13th September 2021. According to the report, Climate Change could force more than 216 million people from across 6 regions (South Asia; Latin America; Sub-Saharan Africa; East Asia and the Pacific; North Africa; and Eastern Europe and Central Asia) to migrate from their own countries by 2050.
About World Bank (WB):
It was created at the 1944 Bretton Woods Conference, along with the International Monetary Fund (IMF).
President– David R. Malpass (13th President)
Headquarters– Washington DC, United States
Member Countries – 189 Countries
