The coronavirus pandemic may have driven as manyas 100 million people back into extreme poverty,World Bank President David Malpass warnedThursday.
The Washington-based development lenderpreviously estimated that 60 million people wouldfall into extreme poverty due to COVID-19, but thenew estimate puts the deterioration at 70 to 100million, and he said "that number could go higher" ifthe pandemic worsens or drags on.
The situation makes it "imperative" that creditors reduce the amount of debt held by poorcountries at risk, going beyond the commitment to suspend debt payments, Malpass said inan interview with AFP.
Even so, 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 tunnelso that new investors can come in is substantial," Malpass said.
Advanced economies in the Group of 20 already have committed to suspending debt paymentsfrom the poorest nations through the end of the year, and there is growing support forextending that moratorium into next year amid a pandemic that's killed nearly 800,000people and sickened more than 25 million worldwide.
But Malpass said that will not be enough, since the economic downturn means those countries,which already are struggling to provide a safety net for their citizens, will not be in a betterposition to deal with the 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 "forthe countries with the highest vulnerability to the debt situation."
The World Bank has committed to deploying $160 billion in funding to 100 countries throughJune 2021 in an effort to address the immediate emergency, and about $21 billion had beenreleased through the end of June.
But even so, extreme poverty, defined as earning less than $1.90 a day, continues to rise.
Malpass said the deterioration is due to a combination of the destruction of jobs during thepandemic 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 economiccrisis persists."
Newly-installed World Bank Chief Economist Carmen Reinhart has called the economic crisis a"pandemic depression," but Malpass was less concerned with terminology.
"We can start calling it a depression. Our focus is on how do we help countries be resilient inworking out on the other side."
Having a clear view of the size of each country's debt and the collateral involved also are key tobeing able to help the debtor nations, Malpass said.
Governments in advanced economies so far have been "generous" in their support ofdeveloping nations, even while they take on heavy spending programs in their own countries,Malpass said.
"But the bigger problem is that their economies are weak," Malpass said of the wealthy nations.
"The most important thing the advanced economies do for the developing countries is supplymarkets ... start growing, and start reopening markets."