World Bank President David Malpass has agreed with Malawi President, Lazarus Chakwera, on the need for debt cancellation for developing countries due to the coronavirus pandemic.
Malpass said up to 100 million people could be forced into poverty and he noted that the pandemic could trigger a debt crisis in some countries.
Malpass also said that the pandemic could trigger another debt crisis, as some developing countries had already entered a downward spiral of weaker growth and financial trouble.
“It is evident that some countries are unable to repay the debt they have taken on. We must, therefore, also reduce the debt level. This can be called debt relief or cancellation,” he said.
“It is important that the amount of debt is reduced by restructuring,” Malpass added.
Last month, in his maiden address which was delivered virtually to the General Debate of the 75th Session of the United Nations General Assembly (UNGA), Chakwera asked for debt cancellation saying it would help poor countries recover from effects of COVID-19.
The Malawi leader acknowledged the World Bank Group, the International Monetary Fund (IMF), the Organisation for Economic Cooperation and Development (OECD) and other development partners for debt moratorium granted to poor countries but asked for more.
“Considering the potential length and breadth of this pandemic, we request and are hopeful for debt cancellation ultimately and an extension of the debt moratorium in the meantime. That will enable us as LDCs to recover from this devastating pandemic sustainably,” said Chakwera.