MESOP MIDEAST WATCH -Top of the Agenda: IMF, World Bank Warn Rising Debt in Poor Countries Could Uneash Crises 21-4-22

Debt buildup in poor countries is a central discussion topic (AP) at this week’s Spring Meetings of the International Monetary Fund (IMF) and World Bank in Washington, World Bank President David Malpass said. He called for action to prevent debt crises in poor countries as the war in Ukraine disrupts food shipments and exacerbates inflation.

Sixty percent of low-income countries are suffering or close to suffering debt distress, IMF Managing Director Kristalina Georgieva said. The IMF predicts consumer prices will rise 8.7 percent in emerging-market countries and 5.7 percent in advanced economies this year, the most since 1984. Bloomberg calculated that countries including El Salvador, Ethiopia, Pakistan, Sri Lanka, and Tunisia are particularly at risk of default.

“Supply chain issues and pandemic-era bottlenecks in global transport and production networks predated the war in Ukraine. The unprecedented use of sanctions in these already troubled conditions has made an already difficult situation worse,” Cornell University’s Nicholas Mulder writes for Foreign Affairs.

“One sign of trouble ahead is the lengthening line of countries in rescue talks with the IMF. Along with Sri Lanka, it includes countries with similar balance-of-payments problems like Egypt and Tunisia, where food prices helped drive regime change just a decade ago,” Bloomberg’s Shawn Donnan, Eric Martin, Andrew Rosati, and Jihen Laghmari write.