Foreign debt doubled to $9 trillion among developing economies, but members of the International Development Association (IDA), the arm of the World Bank aimed at helping the poorest countries, saw their debt almost tripled to $1 trillion.
The external debt service of IDA-eligible countries reached $46.2 billion at the end of last year, about 10.3% of their exports of goods and services. In 2010, the figure stood at 3.2%, according to the report.
“The debt crisis facing developing countries has intensified,” World Bank Group President David Malpass said in a statement. “A comprehensive approach is needed to reduce debt, increase transparency and facilitate faster restructuring.”
Debt relief plans are not new. In 2020, the Debt Service Suspension Initiative (DSSI) was established, after the fallout from the COVID-19 crisis plunged the global economy. The DSSI enabled 48 countries to defer some $8.9 billion in debt service to 2021.
Nevertheless, according to the World Bank report, this is only a small part of the $99 billion in debt service that the participating countries paid despite everything.
Public debt payments in the world’s poorest countries are expected to rise 35% this year from 2021, to about $62 billion, while payments for the next two years are expected to remain high, partly due to rising interest rates and weakening currencies.
Ghana, which along with Sri Lanka and Zambia is facing a debt review, saw its interest payments rise to between 70% and 100% of government revenue, the finance minister said earlier this week. , Ken Ofori-Atta.
The World Bank also noted the urgent need to increase debt transparency to help countries manage risk and speed up debt reviews when necessary. However, the World Bank’s own Debt Reporting System, a loan database created in the 1950s, had significant gaps in terms of SOE lending.
The report also confirmed the change in the composition of creditors.
At the end of 2021, 61% of public and publicly guaranteed debt in low- and middle-income countries was owed to private creditors, up from 46% in 2010.
For IDA-eligible countries, the share of private creditors has quadrupled since 2010, reaching 21% in 2021, while the ratio of external debt to gross national income (GNI) has risen from 20% to 36.2% in the same period.
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