The World Bank calls for debt relief for poor countries

WB President David Malpass said that the COVID-19 epidemic could cause debt crises in some countries, so investors should be ready to bail out, including debt relief.

World Bank (WB) President David Malpass. Photo: AFP / VNA

Business Daily Handelsblatt (Germany), as quoted by Mr. Malpass, in an interview with this newspaper on October 4, said that some countries may not be able to repay their debts, so investors must also reschedule or write off debt. .

He also emphasized the importance of reducing debt through restructuring. The World Bank President pointed out similar steps in previous financial crises in Latin America and the Debt Reduction Initiative for High Indebted Poor Countries (HIPC) in the 1990s.

Last month, rich countries supported an extension of the Group’s Leading Emerging and Developed Economies Group (G20) Debt Settlement Initiative (DSSI). This initiative has helped 43 out of 73 countries with late payment of debt in the formal sector worth 5 billion USD.

In the context of warnings that the pandemic could push 100 million people into extreme poverty, the World Bank President has called for the participation of private banks and investment funds.

According to him, investors have not really made efforts, reducing the effect of relief measures. Malpass warned that the COVID-19 pandemic could trigger another debt crisis as some developing countries have fallen into a spiral of weak growth and financial instability.

He said budget deficits and huge debts pushed economies into trouble, while banks had to face bad debts.

In mid-April, the G20 and the Paris Club agreed to a debt relief initiative for the poorest countries in 2020, amid blockade orders to prevent the spread of COVID-19 that upset the economy. world.

Initiative for debt rescheduling for poor countries has received the support of finance ministers from the Group of leading developed industries in the world (G7).

At an online meeting on June 3, G7 finance ministers emphasized the importance of such relief measures, arguing that allowing “the poorest countries” to delay repayment until the end of 2020 at least will help these countries have the financial resources to finance social, health and other measures to deal with the COVID-19 pandemic.