World Bank, IMFC seek reduction, restructuring to check debt distress

 By Geoff Iyatse

World Bank Group Presiden,t David Malpass. PHOTO: Samuel Corum/Getty Images/AFP

President of the World Bank Group, David Malpass, is seeking cooperation of the global community on a set of action points to prevent the looming debt crisis.

At a press conference on the ongoing annual meetings, Malpass said a “compressive approach” is required to prevent the debt crisis. He noted that many countries were facing external debt distress or at high risk of it.

He pointed out debt reduction, swifter restructuring and more transparency as necessary actions that must be taken to make progress in tackling the debt crisis.

“We need new systems to push that along, because so many countries are in external debt distress or at high risk of it. We need a comprehensive approach.

“The G20 adopted a debt suspension initiative in April of 2020, and deepened it with the Common Framework last in 2020. But this is not creating as much fiscal space as the countries need. The debt burdens are high and unsustainable,” he noted.

The World Bank had earlier released a debt report, which showed a dramatic increase in debt levels and the sustainability problems.

Malpass, during the press conference, spoke extensively on debt, vaccination and climate change, describing them as major challenges the global community must address to achieve sustainable growth.

He mentioned that the vaccination had continued to worsen the two track growth challenge that resulted from the COVID-19 and called on developed countries to assist regions with less vaccination capacity.

According to the President, the World Bank is working with different sub-Saharan countries on its climate change agenda. Cleaner fuels and water, he said, are critical to addressing the challenge. He pledged that the Bank would continue to support in addressing the knowledge gap.

Also yesterday, the International Monetary and Finance Committee (IMFC), expressed concern that the emergence of new COVID-19 variants has increased uncertainty, noting that “recovery is tilted to the downside”.

IMFC said it was taking comprehensive action to extend assistance to countries in need while supporting efforts to restore debt sustainability and strengthen transparency.