World Bank President David Malpass has said the ongoing Russia-Ukraine war has created a terrible crisis in the world economy, which may result in developing countries such as Bangladesh defaulting on their debt payments.
“The amount of International Development Assistance (IDA) loans taken by developing countries from the World Bank under easy conditions at low interest is about 44 billion dollars,” he said during the 2022 Annual General Meeting organized by the International Monetary Fund (IMF) and the World Bank in Washington on Monday.
“Multinational banks, and development partners should work together so that they get fiscal space to repay these loan installments,” he added.
“Ongoing currency devaluations are increasing debt burdens with inflationary pressures for developing countries. Meanwhile, the amount of interest may also increase. This will put the poor people of some developing countries, behind in their struggle for survival,” said the World Bank president.
Calling the ongoing Russia-Ukraine war a “senseless war”, IMF Managing Director (MD) Kristalina Georgieva said that food prices are rising uncontrollably due to the shortage of market supply created by the Covid pandemic and the Russia-Ukraine war.
“As a result, every country is suffering from an economic crisis. In this way, the next 4 years will be a bad time for the world economy. The recession could cost the economy as much as $4 trillion by 2026, equivalent to Germany's total GDP. This will have a negative impact on the global economy,” he added.
“If the current inflationary pressure is not managed, the recession of the poor countries may increase. In the future, world leaders must come forward to deal with this economic crisis,” said the IMF managing director.
Meanwhile, in response to a question from journalists after the general meeting whether Bangladesh has full capacity to repay its debt, Bangladesh Bank Governor Abdur Rauf Talukder said, “The G-7 countries offered time to repay debt installments of member countries under the 'Death Service Suspend Initiative' in 2020. Bangladesh did not take advantage of this. At that time, we said that we have the ability to repay the debt. We will not have any difficulty in paying this loan in the future.”
After nearly 3 years into the Covid situation, the IMF and World Bank headquarters held their Annual General Meeting in Washington DC, USA. It was attended by the finance minister of the members, the governor, and senior officials of the finance department. A delegation of 8 members led by the Governor of Bangladesh Bank participated in the meeting.
