[Asia Economy Reporter Yujin Cho] The debt repayment amount of the poorest countries receiving aid from the World Bank has increased to $62 billion this year, raising concerns about the risk of default.
The World Bank (WB) announced in its International Debt Report published on the 6th (local time) that the external debt of 121 low- and middle-income countries totaled $9 trillion (approximately 1,180 trillion KRW) as of the end of last year, more than double that of 10 years ago.
Among these countries, the external debt of the 69 poorest countries eligible to borrow funds from the World Bank’s International Development Association (IDA countries) increased to $1 trillion during the same period, tripling compared to 10 years ago.
David Malpass, President of the World Bank, said, "The debt crisis faced by developing countries is intensifying," adding, "A comprehensive approach is needed to reduce their debt, increase transparency, and facilitate faster debt restructuring so that these countries can use money to promote growth and reduce poverty."
He also diagnosed that 60% of IDA countries have already entered a high risk stage of debt default. As of the end of last year, IDA countries spent $46.2 billion on long-term public guaranteed external debt repayments. This accounted for 10.3% of their total exports of goods and services or 1.8% of their Gross National Income (GNI). In 2010, the repayment amount accounted for 3.2% of exports and 0.7% of GNI.
The World Bank forecasts that IDA countries’ repayment amount will increase by 35% to $62 billion this year, with China expected to receive 66% of the official bilateral debt repayments from IDA countries.
At the end of last year, the proportion of public guaranteed external debt borrowed from the private sector among IDA countries was 21%, an increase of 16 percentage points compared to 2010.
Additionally, the proportion of debt owed to countries not belonging to the Paris Club, such as China, India, Saudi Arabia, and the United Arab Emirates (UAE), has also surged.
The Paris Club, a group of 22 creditor countries including the United States, the United Kingdom, France, Germany, Japan, South Korea, and Russia, has introduced debt relief measures such as suspending debt repayments for low-income countries facing crises due to COVID-19.
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