The world’s 26 poorest countries, home to 40% of the most poverty-stricken people, are more in debt than at any time since 2006 and increasingly vulnerable to natural disasters and other shocks, a new World Bank report showed on Sunday.
The report finds that these economies are poorer today on average than they were on the eve of the COVID-19 pandemic, even as the rest of the world has largely recovered from COVID and resumed its growth trajectory.
The 26 poorest economies studied, which have annual per-capita incomes of less than $1,145, are increasingly reliant on IDA grants and near-zero interest rate loans as market financing has largely dried up, the World Bank said.
Their average debt-to-GDP ratio of 72% is at an 18-year high and half of the group are either in debt distress or at high risk of it.
Two-thirds of the 26 poorest countries are either in armed conflicts or have difficulty maintaining order because of institutional and social fragility, which inhibit foreign investment, and nearly all export commodities, exposing them to frequent boom-and-bust cycles, the report said.
IDA normally is replenished every three years with contributions from World Bank shareholding countries.
It raised a record $93 billion in 2021, and World Bank President Ajay Banga is aiming to exceed that with over $100 billion in pledges by Dec. 6.
Natural disasters also have taken a greater toll on these countries over the past decade. Between 2011 and 2023, natural disasters were associated with average annual losses of 2% of GDP, five times the average among lower-middle-income countries, pointing up the need for much higher investment, the World Bank said.
