Growing Debt Crisis Among the World's Poorest Nations

The debt levels of the world's most economically vulnerable countries have reached alarming heights, the highest recorded since 2006. A recent world Bank report highlights that the 26 poorest nations, which collectively house about 40% of the global population, are now grappling with an average debt-to-GDP ratio of 72%. Countries such as Ukraine, Egypt, Argentina, Ecuador, and Pakistan are among those facing significant surcharges from the International Monetary Fund (IMF), as borrowing conditions are tightly linked to specific economic policies.

This financial strain has been exacerbated by a decline in international aid, particularly following the COVID-19 pandemic, during which these countries accrued substantial debts, leading to a tripling of their primary deficits. Currently, nearly half of these nations find themselves either in a debt crisis or at imminent risk.

World Bank officials, including Chief Economist Indermit Gill and Deputy Chief Economist Ayhan Kose, emphasize the critical need for enhanced global support and cooperation. They point out that the International Development Association (IDA) has played a vital role in providing financial lifelines, helping to fund essential services such as education, healthcare, and infrastructure.

To navigate this crisis, they advocate for increased investment—estimated at 8% of GDP—and improved tax collection, alongside mobilizing private sector resources. With official development assistance at a 21-year low, the call for greater international collaboration has never been more urgent.