Ground Report | New Delhi: Developing countries Debt crisis; Due to the rising debt crisis, the overall situation of poor countries will become very difficult. Developing nations are also facing the severity of the global recession.
Outbreaks appear to be exacerbated during the debt crisis facing some of the world’s poorest countries. This year, more than 70 percent of low-income nations face an additional 11 billion dollar in debt repayments. That’s 45 percent more than in 2020.
The crisis facing poor countries has been highlighted by the World Bank in its annual report. The World Bank has termed these loans as hidden non-transparent loans and will cause severe financial hardship to low-income people and small business owners.
The World Bank, in its annual report, focuses on a few specific aspects of the global economy. They also look at the economic growth of middle and low-income countries in particular.
The title of the World Bank’s annual report is ‘Finance for a Fair Recovery’. It argues that the debt burden on developing economies is mounting due to the unstable financial system and that they are facing other financial problems, including rising inflation and interest rates in particular.
In the annual report, World Bank President David Milpas wrote that with the economic crisis leading to inflation, high interest rates are actually a sign of a weak financial chain. The report notes that the Corona epidemic has intensified economic challenges. These challenges include transparency of unused loans and delay in repayment of loans.
bad loans is tantamount to making them worse. In this context, it was added that the identification of loans is good for the economic stability of the lending country and also protects the homes of small businesses and low-income people in particular. The report outlines the risks that could affect the lending process.
The World Bank report also said that 50% of households worldwide will face severe difficulties in the next three months as meeting basic needs can be a daunting task. It was also stated that the economic crisis could escalate to the point where average businesses could barely cover two months’ expenses.
According to the report, half of all businesses in developing countries will decline in the aftermath of the epidemic. Carmen Reinhart, the World Bank’s chief economist, says the crisis has not had many economic weaknesses before, and that the process has exacerbated the situation.
Carmen Reinhart has suggested that priorities now need to be redefined and measures must be taken to establish a stable financial system, and that delays in doing so could exacerbate the situation in weak economies.
According to the World Bank, many countries are at risk of default. These countries include Sri Lanka and Ghana. It has become necessary to regulate the debts of 60% low income countries in the light of new rules.
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