Public debts in poor countries, particularly in Africa, growing at alarming rates – Wolrd Bank
By Samuel Abuya
The World Bank Group has sounded a warning of how fast the poor countries around the world are sinking into public debts. According to World Bank, the countries in question are borrowing at alarming rates to a point where they may find it difficult to finance much-needed development projects.
“In the past five years alone, public debt in the poorest countries has increased from 36 percent of GDP to 51 percent of GDP. In addition, public debt-service ratios in some countries are rising at an alarming pace, threatening countries’ ability to invest in much-needed infrastructure, education, health and many other needs crucial for lifting their citizens out of poverty and achieving the international community’s Sustainable Development Goals by their 2030 deadline,” Ceyla Pazarbasiogu is the Vice President, Equitable Growth, Finance and Institutions (EFI), World Bank Group.
According to World Bank, emerging vulnerabilities of public borrowing are dire particularly in Africa. This was revealed after a high-level conference that happened last week in Dakar, Senegal, under the banner “The Future of Debt Management”. The conference was convened and organized by the World Bank Group to celebrate its 10th anniversary of its Debt Management Facility program and saw more than 100 government officials, donors, debt management experts, particularly on public debt, technical assistants, members of civil society groups and policymakers come together.
The conference was mainly key in taking stock of the rising sovereign debt in African countries. According to data from the joint World Bank-IMF Debt Sustainability Framework, the proportion of low-income countries in debt distress or facing a high risk of it has doubled since the year 2013. The data shows that there are many factors that have contributed to that. They include bad policies, bad luck, bad governance and bad investments.
The Dakar gathering reminded African countries of their massive and urgent financial needs. The latest World Bank’s poverty estimates indicate that 26 out of the 27 poorest countries in the world are in Africa. The report also shows that Africa hosts more than half of the world’s poor population.
If the current trends continue, World Bank says 9 out of 10 of the world’s extremely poor people will be in the African continent.
World Bank estimates that billions of US dollars, around $640 billion to $2.7 trillion, is required in order to provide critical services that will go a long way in lifting poverty levels. According to the institution, that is where Debt Management Facility comes into the picture. That is a program that was tailored back in 2008 to help countries strengthen their debt management systems.
Africa Global News Publication
