Existing systems for monitoring the sovereign debts of the poorest countries are inadequate and mask hidden debts, so they likely owe much more than currently estimated record levels, said World Bank (WB) chief economist Carmen Reinhart. .
The multilateral development bank released the first comprehensive assessment of global and national debt surveillance systems on Wednesday, saying it found “massive gaps”In the ability to record how much each country owes and to whom.
The current mosaic of databases, with different standards and definitions, implies that debt estimates could be deviated by up to 30% of a country’s gross domestic product, according to the report, which highlighted that 40% of the countries of low-income had not released data on their sovereign debt for more than two years.
The World Bank, long critical of the lending practices of China, the world’s largest creditor, said last month that the debt burden of low-income countries rose 12% to a record $ 860 billion, in 2020, calling for comprehensive efforts to help low- and middle-income countries achieve more sustainable debt levels.
Reinhart said the actual figure could be “noticeably older”And noted that the new study underscored the need for reforms to ensure better debt statistics, coordinated data collection and integrated debt management systems.
It also stated that the opaque nature of many debt contracts and the complete lack of private sector participation in a debt relief initiative of the G-20 They cloud the prospects for debt restructuring efforts for low- and middle-income countries.
The entity estimates that 12% of low-income countries are already in debt and 44% are at high risk of getting there.
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