The world’s poorest countries now owe $62 billion in annual debt service to official bilateral creditors, an increase of 35% over the past year, World Bank President David Malpass said on Thursday, warning that the increased burden is increasing the risk of defaults.
Malpass told the Reuters NEXT conference in New York that two thirds of this debt burden is now owed to China, providing some details of the development lender’s annual debt statistics report due next week.
“I’m worried about a disorderly default process where there’s not a system to really address” debts for poorer countries, Malpass said.
Malpass also said he was concerned about a buildup of debt in advanced economies such as the United States, because this is drawing more capital away from developing countries.
“And so as the interest rates go up, the debt service goes up for the advanced economies, and that requires a big amount of capital from the world.”
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