The world is about to face a “fifth wave of debt crisis”, World Bank Group (WB) President David Malpass warned on Friday, calling for support for countries in difficulty.
The pandemic has prompted many countries to borrow more to support their economy, now facing the risk of strain on their debt, under the combined effect of inflation and rising interest rates.
“I am worried about the level of debt, worried about a number of countries,” Malpass told an online press conference.
“Nothing but 'in 2022, approximately $44 billion in debt, held by the private sector or states, has become due' in some of the poorest countries, an amount greater than the international aid received by these same countries, underlined the WB Group President.
“We are currently facing what I think is a fifth wave of debt crisis,” he added, calling for “drastically more transparency” on debt levels, both from lenders and borrowers.
The WB Group President was speaking ahead of the annual meetings of the International Monetary Fund (IMF) and a G20 Finance meeting, which will be held next week in Washington.
A call for help for low-income countries
David Malpass took the opportunity to again ask China, among the most important lenders to low-income countries, to communicate more on the sums lent and to do more in order to allow the restructuring of the most problematic debts.
His remarks join the warnings issued by the managing director of the IMF, Kristalina Georgieva, who estimated on Thursday that nearly a quarter of emerging countries and up to 60% of the poorest countries risk being confronted with a crisis of their debt.
This situation is amplified by the slowdown in the global economy, under the combined effect of inflation fueled by rising energy and food prices and the tightening of monetary policy decided by central banks to limit inflation.
“Faced with the risk of financial crisis in developing countries, it is very important to recognize the role that advanced economies play in terms of support for growth,” said David Malpass.
Developing countries also need to see more capital invested in them and, even if the WB tries to increase your aid, “this does not is simply not enough,” he added.
The WB retains four va previous waves of debt crisis since the 1970s, most often leading to financial crises in emerging and developing economies, such as the Asian crisis of the late 1990s.
Katrine Johns has been a reporter on the news desk since 2013. Before that she wrote about young adolescence and family dynamics for Styles and was the legal affairs correspondent for the Metro desk. Before joining The Gal Post, Katrine Johns worked as a staff writer at the Village Voice and a freelancer for Newsday, The Wall Street Journal, GQ and Mirabella. To get in touch, contact me through my email@example.com 1-800-268-7128