World Bank warns G20 against doing too little to tackle debt problems

WASHINGTON (Reuters) - World Bank President David Malpass on Saturday warned G20 leaders that failing to provide more permanent debt relief to some countries now could lead to increased poverty and a repeat of the disorderly defaults seen in the 1980s.

Reuters November 22, 2020 01:10:18 IST
World Bank warns G20 against doing too little to tackle debt problems

World Bank warns G20 against doing too little to tackle debt problems

WASHINGTON (Reuters) - World Bank President David Malpass on Saturday warned G20 leaders that failing to provide more permanent debt relief to some countries now could lead to increased poverty and a repeat of the disorderly defaults seen in the 1980s.

Malpass said he was pleased by progress made by the Group of 20 major economies on increasing debt transparency and providing debt relief to the poorest countries, but more was needed.

"Debt reduction and transparency will enable productive investment, a key to achieving an earlier, stronger and more lasting recovery," Malpass told G20 leaders during a videoconference meeting.

"We need to guard against doing too little now, and then suffering disorderly defaults and repeated debt restructurings as 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, delaying 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 frequent, including in Chad, Angola, Ethiopia and Zambia, and failure to provide "more permanent debt relief" left a bleak outlook for reducing poverty.

G20 leaders are poised to formally endorse extension of a temporary freeze in official bilateral debt payments by the poorest countries, and adoption of a common framework for debt restructuring in the future.

Some countries, including China, have remained reluctant to embrace the need for debt cancellation, although top economists say that will likely be needed in some cases. Private sector creditors have also failed to join in, despite repeated calls by 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 arrears clearance could move quickly, especially given the inflow of refugees from neighboring Ethiopia, which would allow substantial World Bank funding to begin flowing almost immediately.

The United States last month moved to remove Sudan from its list of state sponsors of terrorism, clearing away one of the hurdles facing the heavily indebted African country, which has some $60 billion in external debt.

(Reporting by Andrea Shalal; Editing by Daniel Wallis and Diane Craft)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.