Soaring inflation saddled developing countries with a record $1.4 trillion in debt servicing costs last year, the World Bank said in a report published on Tuesday, detailing the precarious state faced by the world’s most vulnerable economies since the pandemic.
As central banks around the world raised interest rates to slow rising prices, poor countries with already high debt burdens saw the interest payments on the money that they owed to creditors balloon.
While principal balances held steady at around $951 billion, interest payments jumped by a third, to $406 billion.
“These facts imply a metastasizing solvency crisis that continues to be misdiagnosed as a liquidity problem in many of the poorest countries,” Indermit Gill, the World Bank’s chief economist, wrote in the report.
But that simply extends their purgatory.”More than a dozen sovereign nations defaulted on their debt in the last three years, and more than 30 of the world’s poorest countries have experienced “debt distress,” according to the United Nations.
Persons:
Indermit Gill
Organizations:
World Bank, United Nations, Fitch
Locations:
Belarus, Ghana, Lebanon, Sri Lanka, Zambia