The debt burden in poor countries rose 12 percent to $860 billion in 2020 amid the pandemic. That record level prompted World Bank President David Malpass to call for a “comprehensive plan” Monday to tackle the issue.
“A reasonable level of debt at a certain level is important for economic recovery and poverty alleviation,” he said.
Efforts to tackle COVID-19 are complicated by rising debt levels, and tackling that problem will require relief from lenders, Malpass said.
The situation is urgent since the Debt Service Suspension Initiative (DSSI) launched by the G20 countries early last year, will expire at the end of the year. The initiative allows countries to delay debt payments amid the pandemic,
“We need a comprehensive approach to addressing the debt problem, including debt reduction, faster restructuring and better transparency,” Malpass said.
World Bank data released Monday (11/10) showed the worsening of debt indicators occurred massively and had an impact on countries in all regions, across low and middle-income countries. [vm/jm]