Extreme Poverty Could Surge by 100mn, Warns WB Chief

The coronavirus pandemic may have pushed as many as 100 million citizens back to severe poverty, cautioned World Bank President David Malpass on Thursday.

The Washington-based development lender originally predicted that 60 million citizens will plunge into severe poverty as a consequence of Covid-19, but the latest forecast places the downturn at 70 to 100 million and said "the figure might accelerate" if the pandemic worsens or drags on, reports BSS.

The condition makes it "imperative" for investors to reduce the volume of debt kept at the stake by developing nations, moving beyond the agreement to delay debt payments, Malpass said in an interview with AFP.

If now, many nations would be forced to restructure their debts.

“The debt vulnerabilities are high, and the imperative of getting light at the end of the tunnel so that new investors can come in is substantial,” Malpass said.

Advanced economies in the Community of 20 have already agreed to postpone debt payments by the poorest countries by the end of the year, and there is increasing momentum for expanding the moratorium until next year.

But Malpass stated that that will not be enough, as the global crisis ensures that certain nations that are now unable to provide their people with a safety net would not be in a stronger place to cope with payments.

The amount of debt reduction needed will depend on the situation in each country, he said, but the policy “makes a lot of sense.”

“So I think the awareness of this will be gradually, more and more apparent” especially “for the countries with the highest vulnerability to the debt situation.”

The World Bank has pledged $160 billion in support to 100 countries by June 2021 to tackle the global problem, but even so, severe deprivation, described as receiving less than US$ 1.90 a day, continues to grow.

Malpass said the deterioration is due to a combination of the destruction of jobs during the pandemic as well as supply issues that make access to food more difficult.

“All of this contributes to pushing people back into extreme poverty the longer the economic crisis persists.”

Newly installed World Bank Chief Economist Carmen Reinhart called the economic crisis "a pandemic depression," but Malpass was less concerned with terminology.

“We can start by calling it a depression. Our focus is on how do we help countries be resilient in working out on the other side.”