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POVERTY-WORLDBANK
World Bank chief warns extreme poverty could surge by 100 mn
WASHINGTON, Aug 21, 2020 (BSS/AFP) – The coronavirus pandemic may have driven
as many as 100 million people back into extreme poverty, World Bank President
David Malpass warned Thursday.
The Washington-based development lender previously estimated that 60 million
people would fall into extreme poverty due to COVID-19, but the new estimate
puts the deterioration at 70 to 100 million, and he said “that number could go
higher” if the pandemic worsens or drags on.
The situation makes it “imperative” that creditors reduce the amount of debt
held by poor countries at risk, going beyond the commitment to suspend debt
payments, Malpass said in an interview with AFP.
Even so, more countries will be obliged to restructure their debt.
“The debt vulnerabilities are high, and the imperative of getting light at
the end of the tunnel so that new investors can come in is substantial,” Malpass
said.
Advanced economies in the Group of 20 already have committed to suspending
debt payments from the poorest nations through the end of the year, and there is
growing support for extending that moratorium into next year.
But Malpass said that will not be enough, since the economic downturn means
those countries, which already are struggling to provide a safety net for their
citizens, will not be in a better position to deal with the payments.
The amount of debt reduction needed will depend on the situation in each
country, he said, but the policy “makes a lot of sense.”
“So I think the awareness of this will be gradually, more and more apparent”
especially “for the countries with the highest vulnerability to the debt
situation.”
The World Bank has committed to deploying $160 billion in funding to 100
countries through June 2021 in an effort to addresses the immediate emergency,
but even so, extreme poverty, defined as earning less than $1.90 a day,
continues to rise.
Malpass said the deterioration is due to a combination of the destruction of
jobs during the pandemic as well as supply issues that make access to food more
difficult.
“All of this contributes to pushing people back into extreme poverty the
longer the economic crisis persists.”
Newly-installed World Bank Chief Economist Carmen Reinhart called the
economic crisis a “pandemic depression,” but Malpass was less concerned with
terminology.
“We can start calling it a depression. Our focus is on how do we help
countries be resilient in working out on the other side.”
BSS/AFP/MMA/1005HRS