The pandemic has prompted many countries to borrow more to support their economies.
The world is about to face a “fifth wave of debt crisis”World Bank (WB) President David Malpass warned on Friday, asking for support from countries in difficulty. The pandemic has prompted many countries to borrow more to support their economies, which now risk putting their debt under pressure, under the combined effect of inflation and rising interest rates.
“I’m worried about the debt level, worried about a number of countriesDavid Malpass said during an online press conference. “In 2022 alone, approximately $ 44 billion of debt, held by the private sector or other states, became duein some of the poorest countries, an amount higher than the international aid received by these same countries, stressed the president of the World Bank. “We are currently facing what I think is a fifth wave of debt crisis.”he added, asking “Radically more transparency” on the levels of indebtedness, both on the part of lenders and borrowers.
The President of the World Bank spoke ahead of the annual meetings of the International Monetary Fund (IMF) and a G20 finance meeting, to be held next week in Washington. David Malpass took the opportunity to ask China again, one of the most important lenders to low-income countries, to communicate more on the amounts lent and to do more to allow the restructuring of the most problematic debts.
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Global economic recession
His remarks join the warnings issued by IMF chief executive Kristalina Georgieva, who estimated Thursday that nearly a quarter of emerging countries and up to 60% of poorer countries are at risk of facing a debt crisis. A situation amplified by the slowdown in the world economy, under the combined effect of inflation, fueled by the increase in energy and food prices, as well as by the monetary tightening decided by central banks to limit the latter.
“Faced with the risk of a financial crisis in developing countries, it is very important to recognize the role that advanced economies play in terms of supporting growth”, recalled David Malpass. Developing countries also need to see more capital flowing into them, and even if the WB tries to increase your aid, “is not enough”, He added. The World Bank retains four previous waves of debt crises from the 1970s, which most often result in financial crises in emerging and developing economies, such as the Asian crisis of the late 1990s.