The World Bank has announced that the 26 poorest economies in the world are facing their highest debt burden since 2006, according to a report released on Sunday. These nations, which are home to approximately 40 percent of the global population, now have an average government debt level of 72 percent of GDP — marking an 18-year peak. Simultaneously, international aid they receive as a share of their economies has dropped to its lowest point in two decades.
“There is much that low-income economies can — and must — do for themselves,” said Ayhan Kose, the World Bank’s deputy chief economist, in a statement. “But these economies also need stronger help from abroad.”
The World Bank explained that low-income countries borrowed extensively during the Covid-19 pandemic, leading to a tripling of their primary deficits. Many of these nations have struggled to fully reduce these deficits post-pandemic. Nearly half of the 26 poorest economies are now either in debt distress or at high risk of it — a figure that has doubled since 2015.
The Bank noted that its concessional lending arm, the International Development Association (IDA), provided nearly half of all the development aid these economies received from multilateral organizations in 2022.
“At a time when much of the world simply backed away from the poorest countries, IDA has been their main lifeline,” stated the Bank’s chief economist, Indermit Gill. “But if they are to rise out of a state of chronic emergency and meet key development goals, low-income economies will need to accelerate investment to a pace without precedent,” he added.
