The World Bank has urged low and middle income countries to consider restructuring their debt when the Debt Service Suspension Initiative (DSSI) expires in the next three months in order for them to continue economic recovery amid the pandemic
According to the bank, over half of the world’s poorest countries are currently in a foreign debt crisis, and the situation could worsen if commodity prices fluctuate, interest rates rise, or investor confidence in them Emerging economies is being lost.
The bank’s president, David Malpass, said if the DSSI expires later this year, low-income countries will resume debt service payments, reducing their fiscal space and their ability to buy Vaccines and funding other priority expenses.
“It’s up to d he time to pursue a gradual and people-oriented budget consolidation and to restructure unsustainable debts, “said Malpass on Thursday before the annual event of the International Monetary Fund (IMF) 2021 in the Sudanese capital Khartoum from October 11th to 17th / p>
He said global cooperation, including with the private sector, is needed to provide debt relief to the poorest countries and finance growth-enhancing investments.
< The Bretton Woods institutions urged the G20 countries to set up the DSSI to help countries focus their resources on fighting the Covid-19 pandemic and the lives and livelihoods of millions of the most vulnerable Protecting people.
Since it came into effect on May 1, 2020, the initiative has raised more than $ 40 billion in aid in more than 40 regions Authorized countries provided.
A total of 73 countries are entitled to a temporary suspension of debt service payments to their official bilateral creditors.
The World Bank praised Sudan’s process of macroeconomic stabilization two years after the interim government inherited a badly damaged economy and society that suffered from conflict and isolation for decades.
“As the people of Sudan determined to break with the past, Sudan faced extraordinary headwinds from Covid-19, the Locust plague exposed to unprecedented floods and influx of refugees escaping conflict across the border.
” Yet the country pushed ahead with good reforms and again worked with the international community.
“It is a great pleasure for me to speak from Africa today in this challenging time for the continent and the world. These are exceptionally difficult times for Sudan and for Africa and millions of people around the world, “said Malpass.
Sudan has taken difficult steps to rebuild its people after decades of international isolation bring long-term prosperity.
This is a very high-level visit from a World Bank official as the country reached the Highly Indebted Poor Countries Decision Point (HIPC) in June this year – a major milestone that will help the country will enable almost all of its estimated $ 50 billion in foreign debt to be cleared.
Sudan is supported by the International Development Association (IDA), the World Bank’s fund for the poorest countries.
“In this troubling situation” In times of upheaval, the challenge for people and the development community is to overcome the crisis, resume development and have strong foundations nt for the future, “said Malpass.
” In many places around the world, poverty is rising, the standard of living and literacy rates are falling, while nutrition and health care are falling behind
< h3> Climate challenge in focus
According to the bank, countries with low incomes are facing high inflation, too few jobs, shortages of vaccines and food and high adaptation costs to the climate challenge that they did not create. < / p>
“To combat development setbacks, we will need strong new approaches that are suitable for these very challenging times.
” We need to focus our efforts more on setting clear priorities by measuring what works and what does not and increasing success quickly.
“The Covid 19 crisis has led to increased poverty rates and pushed 100 million people into extreme poverty with several hundred millions more we The poor, many of whom live in middle-income countries. ”
According to the bank, human capital accumulation has stalled as most schools have been closed for months.
The global pandemic also took a heavy toll on businesses and governments, with business closings skyrocketing while those businesses remained active, heavily in debt or lagging behind drive dangerously high levels that require particularly careful investment decisions by both the public and private sectors, ”he said.