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The world faces the ‘5th wave’ of debt crisis: World Bank Director


WASHINGTON: The world is facing a “fifth wave of debt crisisWorld Bank Chairperson David Malpass warned Friday, calling for more assistance to countries in distress.
The pandemic forces many countries to borrow more, and the World Bank and International Monetary Fund have warned that many countries are facing or at risk of going into debt amid soaring global inflation and interest rates increase.
“I’m worried about debt levels, worried about individual countries,” Malpass told reporters.
“In 2022 alone, about $44 billion in debt payments from bilateral and private debt services are due,” he said, in some of the poorest countries, larger than the flow of foreign aid that countries receive. can hope.
“Right now we’re in the midst of what I think is the fifth wave of the debt crisis.”
Speaking days before policymakers gathered in Washington for the annual meetings of the IMF and World Bank, Malpass called for “more complete transparency” from creditors and borrowers about debt level.
He has long called for China, a major creditor of low-income countries, to be more open to lending and more aggressive in its efforts to restructure debt, a process that has struggled to gain traction.
His comments come at a difficult time for the world economy, which is already grappling with rising inflation and rising interest rates that threaten to cause global turmoil and rallies. just deviated.
Some observers warn that aggressive rate hikes by major economies could trigger a global recession, but policymakers say it would be worse to let high inflation continue. than.
“It is very important that, as we face financial crises around the developing world, we recognize the primary importance of advanced economies in restoring growth and direction. to a faster growth environment,” Malpass said.
Developing countries also need more capital flows, and although the World Bank is extending help to countries, it is “simply not enough”, he said.
According to the World Bank, there have been four waves of debt accumulation in the global economy since 1970, and have generally caused financial crises in many emerging and developing economies.

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