The world is currently seeing a “fifth wave of the debt crisis,” according to World Bank President David Malpass, who called for extra assistance for struggling nations on Friday.
The pandemic has prompted several nations to increase their borrowing, and the World Bank and International Monetary Fund have warned that many of them are at risk due to debt problems or are already experiencing them due to high rates of interest and worldwide inflation.
Malpass told reporters, “I’m worried about debt levels, I’m worried about country by country.
Some developing nations must pay more in bilateral and private debt service obligations in 2022 alone than they could possibly receive in foreign help, he continued.
We are currently seeing what he believed to be the fifth wave of the debt crisis, he continued.
Malpass demanded “fundamentally increased transparency” from creditors and borrowers regarding debt levels days before the annual meetings of the International Monetary Fund and the World Bank in Washington.
Malpass has long urged China, a significant creditor of low-income nations, to be more transparent in its lending practises and more active in the challenging process of debt restructuring.
His remarks come at a challenging time for the international economy, which is dealing with rising inflation and interest rates that threaten to spread globally and halt the recently recorded rebound.
Policymakers argue that allowing excessive inflation would be even worse than the large interest rate increases that some experts have previously warned could lead to a full-fledged recession in major nations.
“It is crucial that we understand the essential relevance of advanced economies in restoring growth and moving towards a quicker growth environment as we face these financial crises in the developing world,” Malpass added.
Since 1970, there have been four waves of debt crises in the global economy, according to the World Bank, which have caused financial crises in numerous emerging and developing economies.
World Bank: The global debt crisis is experiencing its “fifth wave.”
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