Debt Crisis Threatens Developing Nations, World Bank Head Says
(Bloomberg) -- Developing nations remain at risk of a debt crisis due to the impact of the global pandemic, and the World Bank is working on ways to reduce the burden, President David Malpass said.
The Washington-based development lender and the International Monetary Fund are collaborating closely on designing plans that connect debt reductions to freeing up resources for countries to invest in health care and initiatives to fight climate change, Malpass said.
A debt crisis is “a prominent risk for some of the countries at the bottom, and that has to do with the difficulty of getting new investment,” Malpass said in a Bloomberg TV interview with Lisa Abramowicz, Jonathan Ferro and Tom Keene. “The rest of the world should see that there’s a beneficial linkage” in finding ways to reduce unsustainable debt in developing countries, he said.
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Malpass spoke before the start of a meeting of finance ministers and central bankers from the Group of 20 biggest economies on Friday, where they’re expected to discuss creating $500 billion of new IMF reserve assets called special drawing rights, or SDRs, to provide liquidity to developing nations devastated by the pandemic.
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