World’s 26 Poorest Countries Face Record Debt Levels since 2006, World Bank Warns

The world’s 26 poorest nations are now deeper in debt than at any time since 2006 and face heightened vulnerability to natural disasters and other crises, according to the World Bank.

In a report released on Sunday, the Washington, DC-based institution highlighted that the poorest economies are in worse shape today than they were before the COVID-19 pandemic, despite much of the world having largely recovered. Per capita income in these countries declined by an average of 14% between 2020 and 2024, largely due to the pandemic and subsequent overlapping crises.

The World Bank noted that to achieve critical development goals, these economies would require additional annual investment equivalent to 8% of their gross domestic product (GDP) through 2030, which is double the average investment rate over the past decade.

However, even as the need for assistance grows, net official development aid as a share of GDP has dropped significantly, reaching a 21-year low of 7% in 2022. The report stressed that this decline in aid has occurred at a time when the world’s poorest nations need it most.

Indermit Gill, the World Bank Group’s chief economist and senior vice president for development economics, emphasized the crucial role the International Development Association (IDA) has played in supporting these countries. Gill stated that when much of the world had pulled back, IDA became the main lifeline for these low-income economies, directing substantial financial resources to them over the past five years. The IDA has helped keep these nations afloat by supporting job creation, education, healthcare improvements, and providing essential services like electricity and safe drinking water. However, Gill warned that to break free from a cycle of chronic emergency and achieve key development goals, these countries must significantly accelerate their investment efforts.

The report also underscored the heightened risks faced by low-income economies when it comes to natural disasters. From 2011 to 2023, these nations suffered average annual losses of 2% of GDP due to natural disasters—five times the losses seen in lower-middle-income countries. Furthermore, the cost of adapting to climate change for these countries is five times more expensive, representing 3.5% of their GDP annually.

Ayhan Kose, the World Bank’s deputy chief economist and director of the Prospects Group, noted that while lower-income countries could implement internal reforms, such as broadening their tax base and improving the efficiency of public spending, they would still require stronger support from wealthier nations. Kose highlighted the importance of enhanced international cooperation on trade and investment, along with greater support for the IDA, which could work with the private sector to mobilize additional resources and assist in implementing structural reforms.

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