Photo credit: VOA
The World Bank has said the world’s poorest countries, which are home to 40% of the most poverty-stricken people, are more in debt than at any other time since 2006. They are also more vulnerable to natural disasters and other shocks.
According to a new World Bank report, these economies are, on average, poorer today than they were on the eve of the COVID-19 pandemic. Meanwhile, the rest of the world has recovered mainly from COVID-19 and resumed its growth trajectory.
The report confirms a major setback to efforts to eradicate extreme poverty. It underscores the World Bank’s efforts this year to raise $100 billion to replenish its financing fund for the world’s poorest country, the International Development Association.
According to the World Bank, the 26 poorest economies studied, with annual per-capita incomes of less than $1,145, rely on IDA grants and near-zero interest rate loans as market financing has largely dried up. The average debt-to-GDP ratio of 72% is at an 18-year high, and half of the group is either in debt distress or at high risk of it.
Most of the study’s countries are in sub-Saharan Africa, from Ethiopia to Chad and Congo. However, the list also includes Afghanistan and Yemen. Two-thirds of the 26 poorest countries are either in armed conflicts or have difficulty maintaining order because of institutional and social fragility. This inhibits foreign investment and nearly all export commodities, exposing them to frequent boom and bust cycles, the report said.
