The World Bank reports that the 26 poorest countries are now deeper in debt than at any point since 2006 and face increasing vulnerability to natural disasters and economic shocks, reports Al Jazeera.
The findings, published in a report on Sunday, reveal that these nations are in a worse situation than they were before the COVID-19 pandemic, despite a general recovery in other parts of the world.
The report indicates that per capita income is projected to decrease by an average of 14% between 2020 and 2024 due to COVID-19 and other ongoing crises.
To meet critical development goals, the economies will need additional annual investment equivalent to 8 percent of gross domestic product (GDP) through 2030 – double the average annual investment of the past decade, the World Bank said.
But despite the need for greater assistance, net official development assistance as a share of GDP has plummeted, falling to a 21-year low of 7 percent in 2022, the report said.
“At a time when much of the world simply backed away from the poorest countries, IDA [International Development Association] has been their main lifeline,” said Indermit Gill, the World Bank Group’s chief economist and senior vice president for development economics.
“Over the past five years, it has poured most of its financial resources into the 26 low-income economies, keeping them afloat through the historic setbacks they suffered. IDA has supported job creation and the education of children, worked to improve healthcare, and brought electricity and safe drinking water to large numbers of people. But if they are to rise out of a state of chronic emergency and meet key development goals, low-income economies will need to accelerate investment to a pace without precedent.”
The report also found that low-income economies are far more at risk from natural disasters than other developing economies.
Between 2011 and 2023, natural disasters inflicted average annual losses of 2 percent of GDP – five times the average losses in lower-middle-income countries, the World Bank said.
Adapting to climate change is also five times more expensive for low-income economies, costing the equivalent of 3.5 percent of GDP per year, according to the report.
Ayhan Kose, the World Bank’s deputy chief economist and director of the Prospects Group, said that lower-income countries could take steps to help themselves but would also need help from richer economies.
“They can broaden their tax base by simplifying taxpayer registration and tax collection and administration. They also have plenty of room to improve the efficiency of public spending,” Kose said.
“But these economies also need stronger help from abroad – both in the form of greater international cooperation on trade and investment and in the form of much larger support for IDA, which can work with the private sector to mobilize additional resources and help facilitate structural reforms.”
Bd-pratidin English/Afia
