Debt levels among low- and middle-income countries rose sharply in 2021, with China accounting for 66% of lending by official bilateral creditors, World Bank President David Malpass said, underscoring the need to reduce the debt of poorer countries.
The World Bank’s annual report on global debt statistics, due out next month, makes clear that private sector creditors also needed to participate in debt reductions, Malpass told Reuters in an interview on Friday.
The Group of 20 major economies and the Paris Club of official creditors created a common framework for debt treatments in late 2020 to help countries weather the fallout of the COVID-19 pandemic, but its implementation has been halting.
The creditors of Chad reached the first agreement negotiated under the framework this week, but it leaves the country’s longer-term debt sustainability in question because it does not include actual debt reduction, Malpass warned.
The World Bank, the International Monetary Fund and Western officials have become increasingly vocal about their frustration with China, now the world’s biggest official bilateral creditor, and private sector lenders for not moving forward more quickly.
Preliminary data released by the World Bank in June showed the external debt stock of low- and middle-income countries rose, on average, 6.9% in 2021 to $9.3 trillion, outpacing the 5.3% growth seen in 2020.
Malpass said the bank’s forthcoming International Debt Statistics report was troubling, but gave no specific numbers.