The World Bank has urged the development partners and governments to make progress on debt reduction, and transparency as it expressed concerns that the debt service expected in 2022 from the International Development Association (IDA) countries, the poorest countries in the world, is $44 billion.
The Bank noted that the amount is more than the combined resources of the World Bank and the International Monetary Fund (IMF) to these countries and that it will leave developing countries without the fiscal space for education, climate adaptation, and other necessary means.
These were the remarks made by the World Bank Group President David Malpass to the Development Committee at the 2022 Annual Meetings, which had the presence of UN Secretary-General, Mr Antonio Guterres, and Director General of the World Trade Organisation, Dr Ngozi Okonjo-Iweala.
Malpass said: “We also need to make progress on debt, debt reduction, and transparency. The debt service expected in 2022 from the IDA countries, the poorest countries in the world, is $44 billion and that is more than the combined resources of the Bank and IMF to these counties. This leaves developing countries without the fiscal space for education, climate adaptation, and other necessary means.”
The International Development Association (IDA) is part of the World Bank that helps the world’s poorest countries.
The World Bank Chief added that “Kristalina and I have put forward several changes on debt. We advocate together for debt transparency; a standstill for countries that are applying for Common Framework treatment; inclusion of all creditors from the beginning of the process; a more prominent role for debtor countries; earlier sharing of the parameters of debt relief and debt sustainability analyses; and finally, comparable treatment among official bilateral and commercial creditors using a common discount rate. We need much more progress on debt.”
Another longer-term crisis, which he said should be addressed, as the focus should not be only on the immediate needs, is the slower global growth that has been weighing down countries, particularly, developing countries.
He pointed out that the long-term outlook is modest at best and could be even slower, as there has been a severe concentration of capital in the world, adding to inequality, which needs to be addressed.
Some of the near-term risks that were of concern is food, energy, and fertiliser.
Malpass observed that the cycle going into 2023 presents a grave danger for the world, noting that “we are continuing our rapid ramp-up of support by delivering $30 billion to address food insecurity.”
He added: “And third is the backsliding on greenhouse gas emissions throughout 2022. There’s been sharp increases in the export and burning of coal, oil, and wood—all of which is a grave concern for climate and the world.”
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World Bank expresses concern over $44bn debt service obligations of IDA countries
World Bank expresses concern over $44bn debt service obligations of IDA countries
