The hammer blow of the pandemic
Among these countries, those that are the poorest have particularly suffered from the pandemic, with a drop of up to 14% in their GDP per capita between 2020 and 2024, even though they would have to invest the equivalent of 8% of their GDP per year to achieve their development objectives, underlines the Bank.
“These economies need more aid from outside, directly or indirectly via IDA (the International Development Association, a subsidiary of the World Bank in charge of loans and donations to the poorest countries, editor’s note) », Underlined the deputy chief economist of the WB, Ayhan Kose, quoted in the press release.
However, for these countries, IDA has become the main source of foreign financing, while aid, particularly bilateral, has fallen sharply to reach its lowest level in 21 years in 2022, the last year for which data is available.
“If these countries are to emerge from a chronic state of emergency and achieve essential development objectives, they will need to accelerate their investments” to an unprecedented level and which they will not be able to achieve alone, warned the chief economist of the Bank, Indermit Gill.
Major structural problems
The Bank nevertheless emphasizes that poor States can also act on a certain number of levers, in particular by broadening their tax base in order to strengthen tax revenues but also improve the efficiency of public spending.
The effort required to achieve this is however significant, concedes the WB, while these States are faced with major structural problems, when instability or conflicts do not remove them from direct control of part of their territory.
At the same time, their debt has increased and the share they devote to repaying their debt as well, under the effect of an increase in this debt, but also interest rates, their issues being most often carried out in foreign currency, dollar or euro. The 26 countries studied face an average debt rate corresponding to 72% of GDP, increasing by nine percentage points in 2023 and mobilize more than 10% of their tax revenues to repay the interest on their debt.
