MANILA — Many of the world’s poorest countries are at risk of plunging into a debt crisis as interest rates rise and global growth slows down, the World Bank said on Wednesday.

The multilateral lender said the poorest countries eligible to borrow from its International Development Association (IDA) now spend over a tenth of their export revenues to service long-term public and publicly guaranteed external debt. In its new International Debt Report, the World Bank said this is the highest proportion since 2000.

“Rising interest rates and slowing global growth risk tipping a large number of countries into debt crises. About 60 percent of the poorest countries are already at high risk of debt distress or already in distress, the World bank said.

The foreign debt service payments of IDA-eligible countries totaled $46.2 billion at the end of 2021, which was equivalent to 10.3 percent of their exports and 1.8 percent of their gross national income (GNI), according to the report.

“In 2022, IDA countries’ debt-service payments on their public and publicly guaranteed debt are projected to rise by 35 percent to more than $62 billion, one of the highest annual increases of the past two decades,” the multilateral lender said.

The World Bank noted that China is expected to account for 66 percent of the debt-service payments to be made by IDA countries on their official bilateral debt.

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“At the end of 2021, China was the largest bilateral lender to IDA countries, accounting for 49 percent of their bilateral debt stock—up from 18 percent in 2010,” the bank said.

Countries facing debt distress will find it much harder to quickly restructure their debt due to these developments, the Bank said.

The risk of a debt crisis for poorer countries has been worsened by the slowing of global growth triggered in part by monetary and fiscal policy tightening. The Bank said this has also raised the “the risk of a global recession next year.”

“Currency depreciations have made matters worse for many developing countries whose debt is denominated in US dollars.”

World Bank Group President David Malpass said a comprehensive approach is needed to reduce debt, increase transparency, and facilitate swifter restructuring—so countries can focus on spending that supports growth and reduces poverty.

“Without it, many countries and their governments face a fiscal crisis and political instability, with millions of people falling into poverty,” Malpass said.

“Poor debt transparency is the reason so many countries sleepwalk into a debt crisis,” said Indermit Gill, Senior Vice President and Chief Economist of the World Bank Group.

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