World Financial institution chief reiterates name to forgive poor international locations’ money owed | Economic system Information
Private banks are not doing enough to help countries suffering from the coronavirus, according to David Malpass.
The coronavirus pandemic could spark a debt crisis in some countries, so investors must be ready to provide some form of relief that could include debt relief, World Bank President David Malpass was quoted as saying.
“It is obvious that some countries are unable to repay the debts they borrow. We must therefore also reduce debt. This can be referred to as debt relief or debt relief, ”Malpass said in an interview published on Sunday with the Handelsblatt daily.
“It is important that restructuring reduces debt,” added Malpass.
He pointed to similar steps taken in previous financial crises, such as in Latin America and the so-called “Highly Indebted Poor Countries” initiative for countries with unsustainable debt in the 1990s.
The rich countries last month backed an extension of the G20 debt suspension initiative approved in April to help developing countries survive the coronavirus pandemic, which left 43 out of 73 potentially eligible countries in debt payments of $ 5 billion have postponed.
Malpass warned in August that the pandemic could drive 100 million people into extreme poverty. In his latest comments, he again urged private banks and mutual funds to get involved too.
“These investors are not doing enough and I am disappointed with them. Some of the major Chinese lenders have also not been committed enough. The effect of the aid measures is therefore less than it could be, ”said the head of the World Bank.
Malpass also said the pandemic could spark another debt crisis as some developing countries had already entered a downward spiral of weaker growth and financial hardship.
“The huge budget deficits and debt payments are overwhelming these economies. In addition, the banks there are getting into trouble due to bad credit, ”added Malpass.