International Monetary Fund, World Bank chiefs raise global debt alarm

The heads of the world’s biggest international finance institutions sounded the alarm about record global debt levels, with the International Monetary Fund’s chief saying options to deal with the billions owed by poor nations are disappearing.
 

“We see the problem for many countries getting worse and the tools to deal with this problem are disappearing,” Kristalina Georgieva said in an online discussion with World Bank President David Malpass on Tuesday. “The debt problem is knocking on the door louder and louder.” Both organisations have for months flagged risks from rising debt levels in emerging markets, particularly as interest rates start to increase to cool accelerating inflation. The World Bank estimates that the poorest countries — whose fragile economies have been decimated by the pandemic — owe $35 billion in payments in 2022.

World Bank President Malpass called for a new process for restructuring debt burdens for developing nations amid concerns about a lack of transparency over how much they owe to China.

“The world needs to have a resolution process for debt that’s more robust than we have right now and starts earlier,” Malpass said on Tuesday. “There really needs to be a change,” he said. “The world was set up under the old debt composition, where China wasn’t a big player,” he said.