WASHINGTON — World Bank President David Malpass on Thursday told senior Chinese government officials that Beijing needs to do more to ease the debt burdens on developing economies, the development lender said.
The World Bank said in readouts of Malpass’ meetings with Premier Li Keqiang, Finance Minister Liu Kun and People’s Bank of China Governor Yi Gang that the development bank leader asked officials to publish more data on debt instruments to help speed restructurings for poor countries.
“President Malpass and Premier Li held a detailed discussion on the burden of unsustainable debt levels in many developing countries,” the World Bank said. Malpass said that rapidly rising debt service payments were draining limited resources from debtor countries, reducing spending on health, education, infrastructure and climate priorities.
Malpass participated in meetings with Chinese officials and state lenders in the eastern Chinese city of Huangshan, along with International Monetary Fund Managing Director Kristalina Georgieva, and leaders of other international institutions to discuss a range of macroeconomic issues.
Malpass first confirmed his participation in the meeting last week at the Reuters NEXT conference, also revealing that the world’s poorest countries now owe $62 billion in annual bilateral debt service, up 35% from a year earlier. The World Bank’s annual debt statistics report released on Wednesday shows this is equivalent to a tenth of their export income, the highest level since 2000.
The International Monetary Fund also estimated that low-income countries would need nearly $500 billion in external financing through 2026, with some $57 billion in increased needs over 2022 and 2023 due to Russia’s war in Ukraine.
Malpass asked Finance Minister Liu for China’s “active leadership” in addressing unsustainable debts and accelerating Zambia’s ongoing debt restructuring process.
Zambia is pushing hard to complete the restructuring of nearly $15 billion of external debt early next year and is “in active engagement” with China, its largest bilateral creditor, Zambia’s Finance Minister Situmbeko Musokotwane told Reuters NEXT. The IMF on Thursday urged Zambia to strike a deal with creditors as soon as possible.
Malpass and Liu “also exchanged views on debt transparency, reporting and reconciliation, and comparability of treatment among official bilateral and private sector creditors in restructurings,” the World Bank said. (Reporting by David Lawder; Editing by Stephen Coates)