World Bank chief calls for debt relief for the poorest countries

The pandemic could drive around 100 million people into extreme poverty. World Bank chief David Malpass calls for debt cancellation for particularly hard hit regions.

Disappointed with Chinese lenders and global investors: David Malpass, President of the World Bank.

Dhe coronavirus pandemic could trigger a debt crisis in the poorest countries, according to World Bank President David Malpass. Some developing countries are already in a downward spiral of weaker growth and financial difficulties, said Malpass in an interview with the “Handelsblatt”. It is obvious that some countries are unable to repay the debts they have taken on. “We must therefore also reduce the debt level. This can be referred to as debt relief or cancellation, ”said Malpass. “The huge budget deficits and debt payments are overwhelming these economies. The banks there are also getting into trouble because of bad credit, ”he said. Similar steps were taken in earlier financial crises such as in Latin America and the so-called HIPC initiative for highly indebted countries in the 1990s.

Private banks and investment funds are now also in demand. “These investors are not doing enough and I am disappointed with them. Also, some of the major Chinese lenders have not been committed enough. The effect of the relief measures is therefore less than it could be, ”said the head of the World Bank. The pandemic could drive around 100 million people into extreme poverty.