Coronavirus pandemic effects the economy
By Asia News / Agencies
Aug 25 2020
The lending agency revised its estimates upwards, from 60 to 70-100 million. The number could even go higher if the health emergency persists; hence, it is “imperative” for creditors to reduce the debt burden of poor countries. About US$ 160 billion are ready in loans for 100 nations through June 2021.
BANGKOK – The novel coronavirus pandemic might have driven up to 100 million people into extreme poverty, World Bank (WB) President David Malpass warned yesterday.
The Washington-based development agency noted that unemployment, especially among young people, is rising, a trend confirmed by the International Labour Organisation (ILO) and the Asian Development Bank (ADB).
Previously, the WB had estimated that 60 million people would become poor because of COVID-19, but as the pandemic grows a new estimate puts the deterioration at 70 to 100 million. For Malpass, the number could go higher” if the pandemic drags on.
The situation makes it “imperative” that creditors reduce the amount of debt held by poor countries, rather than simply suspend debt payments, Malpass told AFP.
In any case, more countries will be obliged to restructure their debt. “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 added.
The World Bank has committed to deploying US$ 160 billion in funding to 100 countries through June 2021 in an effort to addresses the immediate emergency; meanwhile, extreme poverty, defined as earning less than US$ 1.90 a day, continues to rise.
For the WB president, 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. And the longer the crisis lasts, the greater the number of people who will fall into “extreme poverty”.
For her part, newly-installed WB Chief Economist Carmen Reinhart called the economic crisis a “pandemic depression”.
Malpass is less concerned with terminology. “We can start calling it a depression. Our focus is on how do we help countries be resilient in working out on the other side.” – Asia News
