Debt crisis to continue to worsen in 2022: World Bank Group president

Malpass was addressing a media roundtable on the Group’s spring meetings this year.

In a virtual conference on April 13 on debt transparency and sustainability, he suggested steps to improve the implementation of the Common Framework. These included establishing a timeline for forming creditors’ committees; suspension of debt service payments and penalty interest; expanding eligibility; a simple rule so that it can be evaluated and enforced; and engaging commercial creditors at the beginning of the process.

“I want to turn now to the inflation problem, which is causing immense strain. Markets are forward looking so it's vital for governments and private sectors to state that supply will increase and that their policies will foster currency stability to bring down inflation and increase growth rates. This is especially important as global supply chains shift away from dependency,” he told the media roundtable.

“Central banks need to use more tools under current policies. The inequality gap has widened materially, with wealth and income concentrating in narrow segments of the global population. Interest rate hikes, if that's the primary tool, will add to the inequality challenge that the world is facing,” he said.

“Central banks can use more of their tools, not just interest rates. Capital is being misallocated now. One of the focal points should be using all the central bank tools so that capital is allocated in a way that helps increase supply. That will be an effective way to address inflation,” he added.

ALCHEMPro News Desk (DS)