World Bank outlines comprehensive debt solutions for countries with high debt

The World Bank has pledged its commitment to a comprehensive debt solutions for countries with high debt vulnerabilities that do not have the financial resources to respond to the Covid-19 crisis.

According to its Country Director, Pierre Laporte, the comprehensive debt solutions will involve four elements- debt suspension, debt reduction, debt resolution, and debt transparency.

Speaking at the ‘End Poverty Day 2021 Programme, Mr. Laprote said many low- and middle-income countries were in a vulnerable position prior to the Covid-19 pandemic, with slow economic growth as well as elevated levels of public and external debt.

“Covid-19 has triggered a steep increase in debt, particularly in Emerging Market and Developing Economies as governments around the world responded to the Covid-19 pandemic with massive stimulus packages and emergency measures. The resulting debt burden of the world’s low-income countries rose 12% to a record $860 billion in 2020. Even prior to the pandemic, many low- and middle-income countries were in a vulnerable position, with slowing economic growth and public and external debt at elevated levels”, it pointed out.

“The World Bank is committed to a comprehensive debt solution that can bring real benefits to people in poor countries, particularly countries with high debt vulnerabilities that do not have the financial resources to respond to the Covid-19 crisis”, it stressed

World Bank commits $435m to support government’s covid-19 programme

Meanwhile, the World Bank has committed a total $435.8 million to support Ghana government’s Covid-19 health response along five strategic pillars. They include stop importation of Covid-19 cases and limit the impact of the virus on social and economic life.

According to the World Bank, it has allocated a significant part of the financing commitment (around $150m) for vaccine acquisition including 16.9m doses of Johnson & Johnson Covid-19 vaccines through the African Vaccine Acquisition Task Team (AVATT) to achieve the Africa Union (AU)’s and WHO’s target of vaccinating 70% of the total population by mid-2022.

Promoting Resilient Recovery

Mr. Laporte said the World Bank is focused on helping countries, including Ghana, build a green, resilient, and inclusive recovery through economic growth.

“As the World responds to the Covid-19 crisis, we (at the World Bank) view poverty, climate change, and economic growth as intertwined issues that are going to define our future. Countries including Ghana need to achieve sustainable economic growth without further degrading the environment or aggravating inequality.”

“We offer our knowledge and experience on climate change, economic management, and social protection to support a resilient recovery based on strong economic growth and job creation: a healthy and vibrant private sector is one of the cornerstones of our Covid-19 strategy. We are linking short- and long-term solutions to help developing countries address COVID while laying the foundations for a green, resilient, and inclusive recovery”, the Country Director said.

Reliable energy is key to fighting Covid-19

For Energy, Mr. Laporte said reliable energy is key to preventing and fighting Covid-19, and necessary for powering health care and critical communications, and boosting economic activity, but access is lacking in many countries.

The World Bank Group, he said, is committed to closing this gap by helping countries transition to clean energy and deliver access to affordable, reliable, and sustainable energy for all.

“We are advising countries on solutions that are economically viable, tailored to their needs, and informed by the latest policy, financial, and technological innovations. We helped Ghana to transition from liquid fuels to gas, considered a transition fuel option towards scaling up green energy.”