KUALA LUMPUR – Countries globally are “under significant financial stress” as a result of their high debt and deficit levels with the debt crisis to “continue to worsen” this year.
World Bank Group President, David Malpass stated this week during the 2022 Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group, that debt is one of the two major impediments to growth worldwide.
Speaking during the media round table session, Malpass reports 60% of low-income countries are already in or at risk of debt issues.
He said that debt problems and currency devaluation imposes a burden that “heavily impacts the poor.”
He explained that the other major constraint on the world’s economy is inflation, which Malpass described as “causing immense strain,” while emphasising that policies must be altered to boost supply, not simply demand.
“Because markets are forward-looking, it is critical for governments and the private sector to communicate that supply will expand and that their policies will promote currency stability in order to reduce inflation and boost growth rates,” he added.
In the midst of the Ukraine conflict, the World Bank President expressed his grave concerns for developing countries, that are suddenly experiencing unexpected price hikes particularly for energy, fertiliser and food as well as the possibility of increased interest rates.
According to Malpass, in light of rising inflation, anticipated rate hikes, the Russia-Ukraine conflict, and slowing development in China, the World Bank reduced its estimated global growth rate for 2022 to 3.2%, down from 4.1% in January.
Additionally, he also said that global trade continues to be constrained by quotas, high import and export tariffs, costly food price subsidies and also export prohibitions on some food products which he believes should stop.
He encouraged the international community to quickly increase emergency food assistance and contribute to the strengthening of social safety nets.
Malpass’ words come just days after he and the leaders of the International Monetary Fund, the United Nations World Food Programme, and the World Trade Organisation called for immediate, coordinated action on food security to assist vulnerable nations facing rising prices and supply shortages.
According to World Bank estimates, for every percentage point increase in food prices, ten million people worldwide fall into extreme poverty.
The World Bank invests approximately US$17 billion annually to bolster food security – a sizable portion of the worldwide effort, according to Malpass.
The 2022 Spring Meetings started on April 18 and lasts until April 24.
– BERNAMA
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