DEBT CRISIS DIRE : WORLD BANK

Washington : World Bank warns of growing debt crisis. The chief economist says G20 is unlikely to address debt burden in poor countries.

Delays in dealing with growing debt burden in poor countries seems unlikely to be resolved by the G20, a top World Bank official warned.

As interest rates are starting to rise around the world, putting more pressure on borrowers, the Group of 20 finance ministers are due to meet in Indonesia this week.

But World Bank Chief Economist Carmen Reinhart is sceptical that there will be a resolution soon to help address unsustainable debts.

''The stalling is really, really problematic,'' she told AFP in an interview. She warmed that an average length of a government debt crisis is nine years, which would create a '' lost decade '' for the already vulnerable countries.

During the Covid-19 pandemic, the G20 put in place a debt service suspension initiative to help countries as they ramped up borrowing to deal with the twin health and economic crises, but that programme ended in December.

And the so-called common framework meant to offer a way to restructure large debt leads, remains subject to uncertainty, and only three countries - Chad, Ethiopia and Zambia - have requested negotiations.

The problem, Reinhart said, is ''these little countries are not systemic. They are not going to make or break the global outlook.''

''So unfortunately, it means they can easily slip into back burner territory and remain on the backburner.''

Advanced economies offered debt forbearance to help countries that already had high poverty and low per capita income, deal with the pandemic, but she said ''the damage is still ongoing''.

Asked if she expected another push to deal with the debt issue at the G20 this week, the official said, ''I hope that they do. But I am not optimistic''.

In its World Development Report released on Tuesday, the global lender again flogged the issue of hidden debt vulnerabilities, due to rising private sector debt during the pandemic as well as lack of transparency around lending, especially by China. [AFP]