The World Bank has revealed that the 26 poorest economies are grappling with the highest debt burden since 2006, according to a report published recently. These nations, which account for about 40 percent of the global population, are facing an average government debt that has surged to 72 percent of their GDP—an alarming 18-year high.
The report highlights a troubling trend: the international aid these countries receive has dwindled to its lowest level in two decades. Ayhan Kose, the World Bank’s deputy chief economist, emphasized the dual responsibility of these low-income economies. While they must take proactive steps to improve their situations, he stated that they also require more robust support from the international community.
The heavy borrowing during the Covid-19 pandemic has exacerbated the situation, with primary deficits tripling. Many of these countries have struggled to reduce these deficits fully, leading to a significant fiscal challenge. Currently, nearly half of the world’s 26 poorest economies are either in debt distress or at a high risk of entering such a state—this figure has doubled since 2015.
The World Bank noted that its concessional lending arm, the International Development Association (IDA), provided almost half of the development aid received by these economies in 2022 from multilateral organizations.
Indermit Gill, the Bank’s chief economist, pointed out that while many nations turned their backs on the poorest countries during this crisis, IDA has remained a critical lifeline.
Gill stressed the urgent need for these low-income economies to accelerate their investment efforts to unprecedented levels if they hope to escape chronic emergencies and achieve essential development goals. The report serves as a stark reminder of the challenges faced by the world’s most vulnerable nations and the need for concerted global action to support their recovery and growth.
