The pandemic has compelled several nations to increase their borrowing, and the World Bank and International Monetary Fund have issued warnings that many of them are at risk of or are experiencing financial problems due to rising global inflation and high interest rates.
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.
The World Bank President’s remarks come at a challenging time for the global economy, which is dealing with rising interest rates and inflation that threaten to spread globally and scuttle the newly recorded recovery.
Policymakers argue that allowing high inflation would be even worse than the large interest rate increases that some experts have previously warned may trigger an all-out 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.
Additionally, even if the World Bank is broadening the breadth of its aid to nations, this is “not enough” and poor countries require larger financial flows.
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.
According to the head of the World Bank, there is a “fifth wave” of the global debt crisis.
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