World Bank Report Highlights Growing Debt Crisis in Poorest Countries

A new World Bank report reveals that the 26 poorest countries, home to 40% of the world’s most impoverished people, are experiencing unprecedented debt levels, with an average debt-to-GDP ratio of 72%, the highest in 18 years, Arab News reported yesterday.

These economies, with per-capita incomes below $1,145, are increasingly dependent on International Development Association (IDA) grants and loans, as market financing has diminished. The report highlights that two-thirds of these nations are either in armed conflict or face social instability, deterring foreign investment.

Additionally, natural disasters have resulted in average annual losses of 2% of GDP from 2011 to 2023, significantly impacting economic stability. World Bank President Ajay Banga aims to raise over $100 billion by December 6 to replenish IDA’s resources. The report emphasizes the need for improved tax collection and public spending efficiency to bolster these economies, which have become poorer since the onset of the COVID-19 pandemic.