WASHINGTON, Nov 12 (Reuters) – Debt levels for low- and middle-income countries rose sharply in 2021, with China accounting for 66% of lending from official bilateral creditors, World Bank President David Malpass said. emphasizing the need to reduce the debt. of the poorest countries.
The World Bank’s annual report on global debt statistics, due out next month, makes clear that private sector creditors should also participate in debt reductions, Malpass told Reuters in an interview on Friday.
The Group of 20 major economies and the Paris Club of official creditors have created a common framework for the treatment of debt at the end of 2020 to help countries deal with the fallout from the COVID-19 pandemic, but its implementation s is stopped.
Chad’s creditors this week reached the first deal negotiated under the framework, but it leaves the country’s longer-term debt sustainability in question as it does not include actual debt reduction, Malpass warned. Friday.
The World Bank, International Monetary Fund and Western officials are increasingly expressing frustration with China, now the world’s largest official bilateral creditor, and private sector lenders for not moving faster.
Preliminary data released by the World Bank in June showed that the stock of external debt of low- and middle-income countries increased by an average of 6.9% in 2021 to reach $9.3 trillion, surpassing the 5.3% growth observed in 2020.
Malpass said the bank’s upcoming report on international debt statistics was troubling, but gave no specific numbers.
“It shows that the amount of debt has increased significantly … and the amount owed to China is about 66% of the total for official bilateral creditors,” he said, adding that Chinese entities were also big creditors. commercial.
“The report clearly indicates that debt reduction must expand broadly to include the private sector and China,” Malpass said, adding that the overall debt issue would be an important topic at the next meeting of leaders of the G20.
“There will be recognition of the seriousness of the problem,” Malpass said, although he said there had been “little uptake” of his push for an immediate freeze on debt payments when countries called for relief under the common G20 framework and other reforms aimed at accelerating debt restructuring efforts.
IMF and World Bank officials say 25% of emerging and developing economies are in or near debt distress, and that figure jumps to 60% for low- and middle-income countries. Weather shocks, interest rate hikes and inflation have increased pressures on economies still recovering from COVID.
Malpass said China had been a reluctant player in the slow process so far. “They are mostly observers,” he said.
Malpass also called for speeding up work on a debt restructuring for Zambia, which first requested aid under the common framework in early 2021.
“There is an urgent need to do this so that debt reduction can take place and Zambia can start attracting the new investments needed,” he said.
For Chad and Zambia, it was essential to speed up the process and adopt real debt reductions, he said. “The longer the process takes, the harder it is for the country and the people of the country to get back on its feet.”
Reporting by Andrea Shalal, editing by Franklin Paul
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