A new report from the World Bank, released on Sunday, highlights the worsening economic situation in the world’s 26 poorest countries. These nations, home to 40% of the most poverty-stricken people, are now more in debt than at any point since 2006 and face increasing risks from natural disasters and other economic shocks.
The report underscores that, while much of the world has recovered from the COVID-19 pandemic, these countries remain poorer on average than they were before the pandemic. The study, published just a week before the World Bank and International Monetary Fund’s annual meetings, emphasizes the growing challenge in eradicating extreme poverty and notes the World Bank’s current effort to raise $100 billion for its International Development Association (IDA) fund to support the world’s poorest nations.
With an average debt-to-GDP ratio of 72%, many of these countries—primarily in sub-Saharan Africa, along with Afghanistan and Yemen—are heavily reliant on IDA grants and low-interest loans as market financing has largely dried up. Half of these countries are either in debt distress or at high risk of it. The report also highlights that two-thirds of these nations face armed conflicts or institutional fragility, further hindering foreign investment and economic growth.
World Bank Chief Economist Indermit Gill stressed that “IDA has been their lifeline” over the past five years, as the organization has directed the bulk of its resources to keep these economies afloat amid historic setbacks. The World Bank, which raised a record $93 billion for IDA in 2021, is now seeking to surpass $100 billion in pledges by December 6 to continue supporting these vulnerable economies.
