The World Bank President on Monday, October 11th, 2021 called for a Broad and comprehensive plan to deal with the issue of the high debt for low-income countries. This was coming just as the debt load for poor countries grew by 12 % to reach $860 billion dollars in the year 2020. He emphasized the need for debt relief on the basis of the fact that to achieve economic recovery and to escape poverty, there needs to be sustainable debt levels for these countries and to effectively tackle these issues, world leaders and lenders would need to provide relief to these countries.
He restated the urgency of this need because of the fact that the laudable unique initiative known as the Debt Service Suspension Initiative which was launched as a means to combat the economic effect of the Covid 19, which allowed the poor countries to hold off on the payment of their debt due to the pandemic, was only supposed to last till the end of this year 2021. He remarked that seeing as the DSSI wasn’t broad enough to adequately address the debt issue, there was a need for a holistic approach to the rising debt issues in poor countries around the world; including debt reduction, quicker processes of restructuring and a much better method of transparency.
The World Bank also released a data that showed deterioration in debt indicators which affected a lot of areas across countries and regions both low and middle income countries, the report presented the fact that a lot of countries were vulnerable when they entered the year 2020, as their debts were already enormous and then the enormous resources that was required to fight the pandemic further added to their economic condition. In those times, the international financial community was able to extend their support for these countries, but the external debts of some of these poor countries increased by as much as 20% without a corresponding increase in economic development and imports; the President described this situation as a tragic reversal in the progress of debt reduction for poor countries . In the year of the pandemic, 2020, the total movement of creditors to poor and countries that needed support grew to $117 billion which is the highest level as reported in a decade creating a possibility that many countries would be in very distressful state at the end of the covid pandemic with debts that could take a long while to write off