By Ebi Kesiena
The World Bank has announced an investment of $17 billion, part of the $51 billion provided by multilateral institutions, to support low- and middle-income countries grappling with escalating debt burdens.
In its report titled “2024 Key Development Challenges in Nine Charts: How the World Is Off-Track to Reduce Poverty,” shared on its official X (formerly Twitter) account, the World Bank highlighted how the COVID-19 pandemic exacerbated debt challenges for developing nations. The subsequent rise in global interest rates has further hindered their recovery efforts.
By the end of 2023, total external debt owed by low- and middle-income countries had reached a record $8.8 trillion, an 8% increase from 2020. The report also revealed that interest payments on these debts rose by nearly a third to $406 billion, significantly reducing investments in vital sectors such as healthcare, education, and environmental sustainability.
“The COVID-19 pandemic sharply increased the debt burdens of all developing countries—and the subsequent surge in global interest rates has made it harder for many to regain their footing,” the report stated.
In response to the growing debt crisis, the World Bank, in collaboration with other multilateral institutions, has prioritised enhancing debt transparency and sustainability.
“Since 2022, the World Bank and other multilateral institutions have invested nearly $51 billion more than we collected in debt-service payments from IDA-eligible economies, with the World Bank accounting for a third of that sum,” the report explained.
The $17 billion contribution highlights the World Bank’s commitment to alleviating financial pressures on low-income nations.
The report also noted that Nigeria, despite being one of Africa’s largest economies, qualifies for International Development Association (IDA) assistance due to its relatively low Gross National Income per capita, meeting IDA’s eligibility criteria.
As of 2024, the World Bank observed that over one-third of people in IDA-eligible countries, and more than half of those in Sub-Saharan Africa, are living in multidimensional poverty.
