The world’s 26 poorest countries, home to 40 per cent of the most poverty-stricken people, are more in debt than at any time since 2006 and increasingly vulnerable to natural disasters and other shocks, a new World Bank report showed yesterday.
The report finds that these economies are poorer today on average than they were on the eve of the Covid-19 pandemic, even as the rest of the world has largely recovered from Covid and resumed its growth trajectory.
The 26 poorest economies studied, which have annual per-capita incomes of less than US$1,145, are increasingly reliant on IDA grants and near-zero interest rate loans as market financing has largely dried up, the World Bank said.
Their average debt-to-GDP ratio of 72 per cent is at an 18-year high and half of the group are either in debt distress or at high risk of it.
IDA normally is replenished every three years with contributions from World Bank shareholding countries.
It raised a record US$93 billion in 2021 and World Bank President Ajay Banga is aiming to exceed that with over US$100 billion in pledges by December 6.
The report also recommended that these economies, which have large informal sectors operating outside their tax systems, do more to help themselves.
This includes improving tax collections by simplifying taxpayer registration and tax administration and improving the efficiency of public spending. — REUTERS
