The pandemic has prompted many countries to borrow more to support their economy.
The world is about to face a “fifth wave of debt crisis”, warned on Friday the president of the World Bank (WB), David Malpass, asking for support for countries in difficulty. The pandemic has pushed many countries to borrow more to support their economy, now facing the risk of debt stress, under the combined effect of inflation and rising interest rates.
“I am worried about the level of debt, worried about various countriesDavid Malpass said during an online press conference. “In 2022 alone, about $44 billion of debt, held by the private sector or other states, came duein some of the poorest countries, an amount higher than the international aid received by those same countries, stressed the president of the World Bank. “We are currently facing what I believe to be a fifth wave of debt crises”added, asking “radically more transparency” in levels of indebtedness, both by lenders and borrowers.
The World Bank president was speaking ahead of annual meetings of the International Monetary Fund (IMF) and a G20 finance meeting, due to take place next week in Washington. David Malpass took the opportunity to again ask China, one of the largest lenders to low-income countries, to disclose more about the amounts lent and to do more to enable the most problematic debts to be restructured.
SEE ALSO – Given the risk of recession, the IMF calls for action
world economic recession
His statements add to the alerts issued by the managing director of the IMF, Kristalina Georgieva, who estimated this Thursday that almost a quarter of emerging countries and up to 60% of the poorest countries are at risk of facing a crisis of their own. indebtedness. A situation amplified by the slowdown in the world economy, sous l’effet conjugés de l’inflation, nourrie por la hausse des prix de l’energie et de l’alimentation, even if the monetary resserrement decided by the central banks to limit this last.
“Given the risk of a financial crisis in developing countries, it is very important to recognize the role played by advanced economies in terms of supporting growth”David Malpass recalled. Developing countries also need to see more capital flowing to them and, even if the World Bank tries to increase its aid, “it’s just not enough”, he added. The World Bank retains four previous waves of debt crises since the 1970s, most of which resulted in financial crises in emerging and developing economies, such as the Asian crisis of the late 1990s.