BUSINESS-ECONOMY
The World Bank has issued a stark warning regarding the economic plight of the world’s poorest nations, indicating that 26 of these countries are in their most precarious financial position since 2006. This alarming revelation underlines the growing challenges faced by low-income economies amid a backdrop of escalating global crises, including climate change and geopolitical tension as detailed in a report by Reuters. Economic indicators reveal distress The report further stated that, the 26 poorest economies studied, which have annual per-capita incomes of less than $1,145, are increasingly reliant on the International Development Association (IDA) grants and near-zero interest rate loans as market financing has largely dried up, the World Bank said. Their average debt-to-GDP ratio of 72 per cent is at an 18-year high and half of the group are either in debt distress or at high risk of it. Impact on poverty and development goals Some of the countries in the study are in sub-Saharan Africa, from Ethiopia to Chad and Congo, but the list also includes Afghanistan and Yemen. These are basically some of the worst affected nations financially. Two thirds of the 26 poorest countries are either in armed conflicts or have difficulty maintaining order because of institutional and social fragility, which inhibit foreign investment, and nearly all export commodities, exposing them to frequent boom-and-bust cycles, the report said. "At a time when much of the world simply backed away from the poorest countries, IDA has been their lifeline," World Bank chief economist Indermit Gill said in a statement. "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." The role of international cooperation As the world grapples with these pressing issues, international cooperation is more crucial than ever. The World Bank has also urged developed nations and international financial institutions to step up their efforts in providing assistance to low-income countries. This includes not only financial aid but also technical support to enhance local capacities for sustainable growth. IDA normally is replenished every three years with contributions from World Bank shareholding countries. It raised a record $93 billion in 2021 and World Bank President Ajay Banga is aiming to exceed that with more than $100 billion in pledges by December 6. Hence, the World Bank's findings serve as an important call for action. The economic struggles faced by the world’s poorest countries represent a significant challenge not just for those nations but for global stability and development as a whole. Immediate and coordinated efforts are essential to ensure that these countries can recover and thrive in an increasingly complex global landscape. A journalist, writing for the WION Business desk. Bringing you insightful business news with a touch of creativity and simplicity. Find me on Instagram as Zihvee, tr None
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