IMF, World Bank chiefs warn of debt squeeze in poor nations

WASHINGTON (AP) — The heads of the International Monetary Fund and the World Bank warned Wednesday that rising interest rates are squeezing the world's poorest countries as they struggle with the coronavirus and soaring food prices.

There is "a huge buildup of debt, especially in the poorest countries,'' World Bank President David Malpass said in a press conference. “As interest rates rise, the debt pressures are mounting on developing countries, and we need to move urgently towards solutions.‘’

Malpass said the “debt crisis'' is a topic of extensive discussion' at this week's Spring meetings of the World Bank and IMF, already dominated by other daunting issues including the war in Ukraine, the coronavirus pandemic and a slowing global economy.

IMF managing director Kristalina Georgieva told reporters Wednesday that 60% of low-income countries were in or near “debt distress'' — an alarming threshold reached when their debt payments equal half the size of their national economies. Countries that strain to pay their creditors will also struggle to help their poorest citizens at a time when the Ukraine war is disrupting food shipments and pushing food prices higher.

Countries around the world piled on debt to shield their economies from the ravages of the coronavirus pandemic and the lockdowns meant to contain it. The IMF forecasts that government debts in low-income countries will surpass 50% of gross domestic product — the broadest measure of economic output — this year, up from less than 44% in the pre-pandemic year 2019.

Globally, the massive economic assistance has worked, fueling an unexpectedly quick recovery from 2020's pandemic recession.

But the rebound caught businesses by surprise. They scrambled to meet surging customer demand, which overwhelmed factories,...