World Bank Reveals 26 Nations Facing Deep Debt Crisis Amid Climate and Economic Struggles

October 14, 2024

The World Bank released a new study late Sunday, revealing that 26 countries are now facing deeper debt levels than at any point since 2006. The list includes nations such as Afghanistan, Yemen, Syria, and North Korea, with the majority located in sub-Saharan Africa, including Ethiopia and Chad. These countries have been heavily affected by economic challenges, with an annual per capita income of less than $1,145 (€1,050), placing them in the low-income bracket. According to the report, these nations are “poorer today on average than they were on the eve of COVID-19,” despite the rest of the world experiencing a recovery.

The study also highlighted the crucial role of the World Bank’s International Development Association (IDA) in supporting these economies. The IDA has become a financial lifeline for these countries, helping them survive through significant economic setbacks over the past five years. “At a time when much of the world simply backed away from the poorest countries, IDA has been their lifeline,” stated World Bank chief economist Indermit Gill. The report underscores how IDA’s resources have been funneled into these 26 low-income economies, stabilizing their economies despite the global challenges.

In addition to their economic struggles, these countries are particularly vulnerable to the impacts of climate change and natural disasters. The report found that government debt in these nations now averages 72% of their economic output, the highest in 18 years. Furthermore, natural disasters, fueled by climate change, have caused annual losses averaging 2% of economic output between 2011 and 2023—five times higher than in low-middle-income countries. The cost of addressing climate change is disproportionately higher for these nations, many of which lack the robust infrastructure seen in more developed countries. This vulnerability adds to their already significant financial and developmental challenges.

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