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.
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