The World Bank Group says the coronavirus pandemic is worsening the debt crisis in many countries and deepening poverty.
A statement issued by the World Bank Group President, David Malpass, on Thursday stated that the crisis has reversed the gains of gender equality, nutrition and literacy in many poor and middle-income countries.
He, therefore, advised lower-income countries to prioritise concessional financing and avoid the high-interest rate financing due to its associated problems.
“The COVID-19 crisis has resulted in increased poverty rates again after decades of steady decline. It has pushed nearly 100 million people into extreme poverty, with several hundred million more becoming poor, many of them in middle-income countries,” he said.
He added, “As of mid-2021, over half of IDA countries, the world’s poorest countries, are in external debt distress or at high risk of it. This situation could worsen if commodity prices are volatile, interest rates increase, or investors lose confidence in emerging markets.
“This is also a time for proactive debt management to reprofile payments while international interest rates remain low. In many places around the world, poverty is rising, living standards and literacy rates are falling, and past gains on gender equality, nutrition and health are sliding backward.
“For some countries, the debt burden was unsustainable before the crisis and is getting worse. Rather than gaining ground, the poor are being left behind in a global tragedy of inequality.”
Malpass said that digital solutions can increase competition in product markets and enable people to sell services online, connecting them to national and global markets.
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He said, “Supporting this transformation requires many actions at scale: investing in digital infrastructure, eliminating monopolies in the telecom sector, providing national IDs, and creating an enabling regulatory environment.”
“The digital revolution can also transform the public sector. For example, it allows a radical rethink of safety nets systems.
“Across the world, we are seeing programmes move from in-kind and cash delivery to digital delivery, direct to people’s bank accounts or visible on their phones”
The group president called for the strengthening of education and health systems as he noted that the World Bank Group was positioned to support countries while mobilising the private sector.
