At the Spring meetings of the institutions on Thursday, newly-installed World Bank President David Malpass warned that “17 African countries are already at high risk of debt distress, and that number is just growing as the new contracts come in and aren’t sufficiently transparent.”
World Bank is calling for more transparency about loan amounts and terms, and cautioning governments against relying too much on debt.
Malpass acknowledged that lending can help economies grow “but if it’s not done in a transparent way, with good outcome from the build-up of debt, then you end up having it be a drag on economies.”
He cautioned that “history is full of those situations where too much debt dragged down economies.”
The G20 has called on the two Washington-based lenders to collect data on debt to get a better handle on the amounts and loan conditions.
“I’ll be reporting to the G20 on the progress during our meetings coming up this week, and the keys are to have transparent disclosure of the debt as it is being created, and also then have the focus on good outcomes in terms of quality projects,” Malpass said.
“This is critical for poor countries as they try to move forward to have the projects associated with good quality programs and full disclosure of the debt.”
Moreover, The rising influence of lending by China to developing nations is increasingly under the spotlight amid concerns the growing debt burden and onerous conditions could sow the seeds of a crisis.
