World Bank — Record Debt Levels Could Put Developing Countries In Crisis

The World Bank says interest payments on debt for the world’s poorest countries quadrupled over the past decade.

For the 75 countries eligible to borrow from the World Bank’s International Development Association, which supports the poorest countries, these costs reached an all-time high of $23.6 billion in 2022.

The latest International Debt Report showed overall costs to pay down on sums owed for the 24 poorest countries are expected to balloon in 2023 and 2024—by as much as 39 percent.

Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President says “Record debt levels and high interest rates have set many countries on a path to crisis”.

He says every quarter that interest rates stay high, results in more developing countries becoming distressed—and facing the difficult choice of servicing their public debts or investing in public health, education, and infrastructure.

The World Bank says the situation warrants quick and coordinated action by debtor governments, private and official creditors, and multilateral financial institutions, to deploy better debt sustainability tools, and swifter restructuring arrangements.

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 Edited by Jesus Chan

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