"World Bank warns poor nations risk ‘lost decade’ with record $443bn debt burden"

" World Bank warns poor nations risk 'lost decade' with record $443bn debt burden \r\n\r\nDeveloping nations spent a record $443 billion in debt service payments in 2022, according to the World Bank, which warned the situation risks tipping more countries into crisis and setting off a \u201clost decade\u201d of economic stagnation.\r\n\r\nThe payments, which include principal and interest, rose by more than 5% from the previous year, the Washington-based lender said Wednesday in its latest International Debt Report.\r\n\r\nDeveloping countries globally took on piles of debt during the previous two decades of steady economic growth and low interest rates. But after the impact of the pandemic, war in Europe and a surge in interest rates, those debt burdens have become unsustainable, particularly as the stronger US dollar pushes domestic inflation higher and depletes foreign-exchange reserves.\r\n\r\nRestructuring those debts has also become harder with the emergence of new sovereign lenders, most notably China, as well as a growing share of private creditors. Reworking debt loads for some countries now \u2014 including Zambia, Ghana and Sri Lanka \u2014 has been stalled for years as the creditors struggle to agree on terms under a process being encouraged by the World Bank\u2019s sister institution, the International Monetary Fund.\r\n\r\nThe World Bank warned that the rising debt payments are diverting resources away from health, education and the environment.\r\n\r\n\u201cRecord debt levels and high interest rates have set many countries on a path to crisis,\u201d Indermit Gill, the bank\u2019s chief economist, said in a statement. \u201cEvery quarter that interest rates stay high results in more developing countries becoming distressed.\u201d\r\n\r\nAbout 60% of low-income countries are at a high risk of debt distress or already in it, according to the World Bank. Over the past three years, there have been 18 sovereign defaults across 10 developing countries, more than the total over the previous two decades, it said.\r\n\r\nThe 75 poorest nations \u2014 which are eligible to receive low- and no-interest financing and grants from the World Bank\u2019s International Development Association \u2014 paid an all-time high of $88.9 billion to service their debts in 2022. Interest payments by those countries quadrupled over the past decade to $23.6 billion."

"World Bank warns poor nations risk ‘lost decade’ with record $443bn debt burden"

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