In 2020, the debt of low-income countries increased by 12 percent and reached a record 860 billion dollars. The growth of debt obligations is associated with the stimulating economic policy of states during the coronavirus pandemic, reports Reuters with reference to the World Bank report.
The President of the World Bank David Malpass stated that the study showed the increased debt vulnerability of low and middle-income countries. “We need a comprehensive approach to the problem of debt, including debt reduction, faster restructuring and increasing transparency,” the economist called. He stressed that the sustained level of debt is vital to restoring the economy and fighting poverty.
According to the report, in 2020, the cumulative external debt of low- and middle-income countries increased by 5.3 percent to 8.7 trillion dollars. The chief economist of the World Bank Carmen Reynhart said that the problems faced by countries with high debt may be aggravated. “The policy makers must prepare for the possibility of a debt crisis when the conditions in financial markets will become less favorable, especially in emerging market countries and developing economies,” she warned.
Due to the coronavirus, the debt load of countries around the world has increased. Thus, the size of world debt in the second quarter of 2021 reached a record level of 296 trillion dollars, which is 56 trillion more than before the COVID-19 pandemic.