Inflation: World Bank Alerts On Danger Of Rising Debts
The World Bank recent report has identified debt and inflation as major obstacles to global growth, with Nigeria debt skyrocketing to 15.92 per cent inflation.
The Bank disclosed that high debt and deficit levels have put countries under severe financial stress, noting that 60 per cent of low-income countries are already either in debt distress or at high risk of it.
World Bank Group President, David Malpass who stated this at the Spring Meetings 2022 Media Roundtable opening remarks reiterated that “We expect the debt crisis to continue to worsen in 2022”.
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He implore Nigeria and others to establish a timeline for forming creditors’ committees, suspend debt service payments and penalty interest and focus on expanding eligibility.
He also called for a simple rule so that it can be evaluated and enforced, and engaging commercial creditors at the beginning of the process.
According to him, policies should be adjusted to improve supply, not just increase demand, in the face of inflation, which is causing immense strain.
“I want to turn now to the inflation problem, which is causing immense strain. Policies need to be adjusted to enhance supply, not just increase demand.
“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 added “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.
“Some of the tools include: Changing the duration of their portfolio; it would be very helpful to shorten it. Encouraging supply through their regulatory policies. Providing forward guidance that fosters currency stability. Other tools as well to powerfully address the inflation problem.”
He further noted that fragility is a major issue within the developing world and promised to discuss all issues with shareholders and members during the spring meetings.
