Economy

Low-income countries’ debt rises to $860bn in 2020- World Bank report

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Low-income countries’ debt rises to 0bn in 2020- World Bank report

Debt of low-income countries rose 12% to $ 860 billion in 2020, according to the World Bank’s 2022 International Debt Statistics (IDS) report.

The report was released Monday at the annual meetings of the World Bank and the International Monetary Fund (IMF) in Washington.

The report says governments around the world have responded to the COVID-19 pandemic with massive fiscal, monetary and financial stimulus packages.

He added that the stimulus packages were aimed at tackling the health emergency, mitigating the impact of the pandemic on the poor and vulnerable and putting countries on the path to recovery.

Even before the pandemic, she said, many low- and middle-income countries were in a vulnerable position, with slower economic growth and high levels of public and external debt.

“The outstanding external debt of low- and middle-income countries increased by 5.3% in 2020 to reach $ 8.7 trillion. “

The report says that a comprehensive approach to debt management is needed to help low- and middle-income countries assess and reduce risk and achieve sustainable debt levels.

He said the deterioration in debt indicators was widespread and had impacted countries in all regions, adding that in all low- and middle-income countries, the rise in external indebtedness exceeded national income. gross (GNI) and export growth.

“The external debt / GNI ratio of low and middle income countries (excluding China) rose to 42% in 2020 from 37% in 2019, while their debt to exports ratio fell from 126 to 154% in 2020 percent in 2019.

“In response to the unprecedented challenges posed by the pandemic and the pressing demand from the World Bank Group and the IMF, in April 2020, the G20 launched the Debt Service Suspension Initiative (DSSI) to provide a temporary liquidity support to low-income countries.

“The G-20 countries have agreed to extend the deferral period until the end of 2021.

“In November 2020, the G20 agreed on a common framework for dealing with debt beyond the DSSI, an initiative to restructure unsustainable debt situations and protracted funding gaps in countries eligible for the DSSI. DSSI. “

He said, however, that overall, in 2020, net inflows of multilateral creditors to low- and middle-income countries reached $ 117 billion, the highest level in a decade.

In addition, net inflows of external public debt to low-income countries rose 25 percent to $ 71 billion, also the highest level in a decade.

He said multilateral creditors, including the IMF, provided $ 42 billion in net inflows while bilateral creditors accounted for an additional $ 10 billion.

David Malpass, President of the World Bank Group, said there was a need for a comprehensive approach to the debt problem, including debt reduction, faster restructuring and improved transparency.

He also said that sustainable debt levels were essential for economic recovery and poverty reduction.

Carmen Reinhart, Senior Vice President and Chief Economist of the World Bank, said economies around the world face a daunting challenge posed by high and rapidly increasing levels of debt.

“Policymakers need to prepare for the possibility of debt distress when financial market conditions become less favorable, especially in emerging and developing economies. “

The Nigeria News Agency reports that the IDS is a long-standing annual publication of the World Bank featuring external debt statistics and analysis for the 123 low- and middle-income countries that fall under the reporting system. of World Bank debt (DRS).

The report also assists policymakers and analysts by monitoring overall and country-specific external debt trends in low- and middle-income countries.

It provides a comprehensive picture of external borrowing and sources of lending by type of borrower and creditor with information on the availability and comparability of data.

Source: NAN

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