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WASHINGTON (Reuters) – World Bank President David Malpass warned G20 leaders on Saturday that failing to provide more permanent debt relief to some countries now could lead to increased poverty and a repeat of defaults. messy eighties.
Malpass said he was pleased with the progress made by the Group of 20 major economies in increasing debt transparency and providing debt relief to the poorest countries, but more is needed.
“Debt reduction and transparency will enable productive investment, a key to an earlier, stronger and longer-lasting recovery,” Malpass told G20 leaders during a meeting via video conference.
“We need to protect ourselves from doing too little now and then suffering disorderly defaults and repeated debt restructurings like in the 1980s,” he said.
The so-called ‘lost decade’ of the 1980s saw many highly indebted countries in Latin America and elsewhere unable to pay their debts, slowing down growth and efforts to reduce poverty.
Malpass, who began pushing for debt relief early in the COVID-19 crisis, warned that debt challenges were becoming more prevalent, including in Chad, Angola, Ethiopia and Zambia, and the lack of a “more permanent debt relief” left a grim picture for reducing poverty.
The G20 leaders are prepared to formally support the extension of a temporary freeze on official bilateral debt payments by the poorest countries and the adoption of a common framework for debt restructuring in the future.
Some countries, including China, have been reluctant to accept the need for debt cancellation, although leading economists say it is likely to be necessary in some cases. Private sector creditors have also failed to join, despite repeated calls from G20 leaders, civil society groups and the United Nations.
Malpass said the Bank was working closely with the G20 in countries affected by fragility, conflict and violence, including the Sahel, Somalia, Lebanon, Gaza and the West Bank.
In Sudan, he said he was hopeful that the settlement of arrears could move forward quickly, especially given the influx of refugees from neighboring Ethiopia, allowing substantial World Bank funds to start flowing almost immediately.
Last month, the United States took steps to remove Sudan from its list of state sponsors of terrorism, clearing one of the obstacles facing the heavily indebted African country, which has some $ 60 billion in foreign debt.
Reporting by Andrea Shalal; Editing by Daniel Wallis and Diane Craft
