WASHINGTON: Developing countries spent nearly half a trillion dollars to service their external public and publicly guaranteed debt in 2022, draining funds from critical health, education and climate needs, and putting the poorest countries at increasing risk of “tumbling into a debt crisis,” the World Bank said on Wednesday.
In its latest International Debt Report, the bank said the debt-service payments — including principal and interest — rose 5 percent to a record $443.5 billion from a year earlier amid the biggest surge in global interest rates in four decades. It said the payments could shoot 10 percent higher in 2023-2024.
The 75 poorest countries were hardest hit, said the report, now in its 50th year. Their external public debt service payments reached a record $88.9 billion in 2022 and would surge by 40 percent over the 2023-2024 period. Their interest payments alone had quadrupled since 2012 to $23.6 billion, it said.
“This is the decade of reckoning,” World Bank chief economist Indermit Gill told Reuters in an interview. “Record debt levels and high interest rates have set many countries on a path to crisis,” he said, warning that continued high interest rates would push more developing countries into debt distress.
Gill said he was paying close attention to Ethiopia’s discussions with bondholders after a breakdown in talks over how long to extend the maturity and spread out repayments of its single $1 billion international bond maturing in December 2024.
“Ethiopia is like a canary in the coal mine,” he said. “It’s the biggest country that would default. That’s an important one. It’s one of the five biggest economies in sub-Saharan Africa.”
Ethiopia is careening toward default after it said last week it could not pay a $33 million bond coupon due on Monday.
Gill told reporters that steep debt servicing costs, high debt burdens and slowing growth in many countries raised concerns about a new debt crisis and the risk of contagion, but said he does not view that risk as “imminent.”
He said the situation would remain difficult for developing countries, with past experience indicating that interest rates were unlikely to come down “anytime soon” especially since supply shocks could jack up inflation again quickly.
Gill called for “quick and coordinated action” by debtor countries, private and official creditors, and multilateral financial institutions to improve transparency, develop better debt sustainability tools, and speed up debt restructurings.
African countries faced “another lost decade,” Gill told Reuters, noting they had seen no per capita income growth since 2014 on average.
The report said one in every four developing countries was now priced out of international capital markets and there had been 18 sovereign debt defaults in 10 countries over the past three years, more than in the past two decades combined.
Debt service payments consumed an ever-larger share of export revenues, with some countries now “just one shock away from a debt crisis,” Gill wrote in the report, noting that about 60 percent of low-income countries are already in or at risk of debt distress.
Domestic debt levels were also high in countries like Argentina and Pakistan, increasing risks. Countries that deferred making principal and interest payments under the Group of 20’s Debt Service Suspension Initiative (DSSI) adopted during the COVID pandemic also faced additional costs now that those payments were due, the bank said, although exact data won’t be reported until 2024.
The report noted private capital had largely withdrawn from developing countries, favoring higher interest rates in advanced economies. Private creditors received $185 million more in principal repayments than they disbursed in loans, the first time that was seen since 2015.
Overall, there was a net outflow of $127.1 billion from low- and middle-income countries to bondholders, compared to an average inflow of $202 billion from 2019-2021.
The World Bank and other multilateral creditors, helped fill the gap, providing a record $115 billion in new financing for developing countries in 2022, the report said.
Pakistan, other developing countries, spent record $443.5 bln to service public debts in 2022 — World Bank
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Pakistan, other developing countries, spent record $443.5 bln to service public debts in 2022 — World Bank
- Servicing external debts drains funds from critical health, education and climate needs, says World Bank report
- Continued high interest rates would push more developing countries into debt distress, says World Bank’s chief economist
Ceasefire fails in Pakistan’s northwest as sectarian clashes in Kurram kill 63
- The tribal district bordering Afghanistan has a long history of tribal and sectarian conflicts
- KP administration said it brokered a ceasefire after clashes followed the death of 41 people
PESHAWAR: At least 63 people have been killed and over 150 injured in the past three days in the northwestern Pakistani district of Kurram, as the seven-day ceasefire announced by the Khyber Pakhtunkhwa (KP) government failed to hold, and clashes between warring tribes continued.
Kurram, a former semi-autonomous tribal area bordering Afghanistan, has a long history of violent conflicts that have claimed hundreds of lives over the years. A major conflict in the district, triggered in 2007, lasted for years before being resolved by a jirga, or a council of tribal elders, in 2011.
The recent violence in the restive district erupted earlier this month when gunmen attacked a convoy carrying members of the minority Shiite community in the Uchat area of Lower Kurram, killing 41 people.
According to medical officials in the region, 63 bodies have been brought to two different medical facilities since the KP authorities said they had brokered the seven-day ceasefire.
“A total of 47 dead bodies and 132 injured people were brought to the hospital in the past three days,” a medical officer at the District Headquarters Hospital, who requested anonymity since he is not authorized to speak to the media, told Arab News on Wednesday.
Aziz-ur-Rehman, another doctor at BHU Mandori, also shared casualty figures over the phone.
“Sixteen dead bodies and 44 wounded individuals were brought to BHU Mandori during the recent clashes,” he said.
The KP administration announced the ceasefire on November 24, but Kurram continued to witness sporadic clashes.
According to Irfan Khan, a resident of the area, the situation remains “tense” in the district.
“The attacks intensify at night and relax during the day,” he told Arab News. “There is fear and tension all around as anything can happen at any time.”
Pakistani stocks rebound over 3,000 points after political clashes in Islamabad ease
- KSE-100 index recorded its largest-ever single-day decline on Tuesday, plummeting 3,506 points
- Analysts say the market has been performing well due to improved macroeconomic indicators
KARACHI: The Pakistan Stock Exchange (PSX) rebounded significantly on Wednesday, rising over 3,000 points at the start of trade, following a steep drop a day earlier during major political clashes in the capital.
The benchmark KSE-100 index recorded its largest-ever single-day decline on Tuesday, plummeting 3,506 points, or 3.57 percent, amid political uncertainty triggered by a protest march on Islamabad led by supporters of former Prime Minister Imran Khan, demanding his release from jail.
Khan’s followers retreated overnight after security forces conducted a large-scale operation in Islamabad, clearing the main thoroughfare near parliament and key government buildings.
Subsequently, the PSX surged by 3,260.99 points in the morning, trading at 97,835.15 as of 11:10 AM.
According to Shehryar Butt, portfolio manager at Dawson Securities, the stock market has been performing well lately due to improved macroeconomic indicators.
“The stock exchange came under pressure yesterday due to the political noise in the country,” he told Arab News. “The market stood on 99,700 points before it came down. Today, it is back on track since the political protest is over.”
Pakistan’s Finance Minister Muhammad Aurangzeb said on Sunday that political protests had inflicted daily economic losses of Rs190 billion ($684 million), compounding the challenges faced by the nation’s struggling $350 billion economy.
Amid the unrest, Belarusian President Alexander Lukashenko is leading a 68-member delegation in Pakistan to discuss enhanced economic cooperation.
Both nations on Tuesday signed 15 memoranda of understanding aimed at boosting trade and investment ties, which the government hopes will help stabilize Pakistan’s economy.
The government has also accused Khan’s Pakistan Tehreek-e-Insaf (PTI) party of attempting to sabotage Lukashenko’s visit and impede the country’s path to economic recovery.
PTI lawmakers have said, however, they planned the protest before information about the Belarusian delegation’s visit was made public, dismissing the government’s allegation.
ICC to decide fate of Pakistan’s Champions Trophy on Friday
- India has declined to play in Pakistan over security concerns, which the hosts have dismissed
- Last year, when Pakistan hosted Asia Cup, India’s matches were played outside the country
KARACHI: The International Cricket Council (ICC) will meet this week to determine the destiny of next year’s Champions Trophy after India refused to play in host nation Pakistan, a spokesman said Tuesday.
Earlier this month, the ICC informed the Pakistan Cricket Board that India would not tour Pakistan for the eight-team tournament, leaving the fate of the event hanging in the balance.
The nuclear-armed neighbors have fought three wars since being carved out of the subcontinent’s partition in 1947 and that rivalry is often reflected on the cricket field.
A spokesman for the ICC based in Dubai told AFP they could “confirm an ICC meeting on Friday” where the issue will be on the agenda, without providing further details.
The PCB has already rejected proposals that would allow India to play in a neutral third country, insisting the full schedule from February 19 to March 9 must be staged on their turf.
India’s cricket board has not commented on the tournament.
Deteriorating political ties mean bitter rivals India and Pakistan have not played a bilateral cricket series for over a decade — squaring off only in ICC multi-nation events.
Pakistan suffered a years-long drought of matches at home as teams refused to visit after a 2009 attack on the Sri Lankan team bus in Lahore. International play only fully resumed in 2020.
When Pakistan hosted last year’s Asia Cup, India’s matches were played outside the country.
But Pakistani cricket chiefs have rejected security fears for the Champions Trophy, pointing to their recent successful hosting of top teams including Australia, England, and South Africa.
The Champions Trophy will be the first ICC event staged in Pakistan since it co-hosted the 1996 World Cup with India and Sri Lanka.
Pakistani capital returns to normalcy as supporters of Imran Khan call off protest
- PTI supporters dispersed from Islamabad after security forces launched a midnight raid
- Party says eight supporters killed in clashes, government says four troops dead
ISLAMABAD: The federal capital of Islamabad returned to normalcy on Wednesday morning after the Pakistan Tehreek-e-Insaf (PTI) party of jailed ex-premier Imran Khan suspended protests to demand his release from jail after a sweeping midnight raid by security forces, the PTI said.
Thousands of protesters had gathered at the D-Chowk square in Islamabad on Tuesday after a convoy, led by Khan's wife Bushra Khan, and Ali Amin Gandapur, the chief minister of the Khyber Pakhtunkhwa (KP) province where the PTI is in power, broke through several lines of security all the way to the edge of the city's highly fortified red zone, home to key government and diplomatic buildings.
A raid that started around midnight plunged the area into darkness as tear gas was unleashed on supporters, who dispersed.
“We are announcing the cancellation of our peaceful protest for the time being in view of the government’s brutality and plans to turn the capital into a slaughterhouse for unarmed citizens,” the PTI said in a statement, saying Khan would now announce the “future action plan” for supporters.
The party confirmed eight people were confirmed dead in the late-night clashes but “hundreds” more were feared to have been killed. The government says three paramilitary troops and one policeman had died since the PTI launched its protest on Sunday.
Addressing the media after the raid, Federal Interior Minister Mohsin Naqvi voiced optimism that normalcy would return to Islamabad.
“You saw them fleeing— thousands, not just one or two or three,” he said, referring to the protesters. “For us, the most important thing is to restore all the roads in Islamabad that were blocked. Reopen mobile phone and Internet services. By tomorrow, you will find the roads operational.”
On Wednesday morning, residents woke up to city workers cleaning up debris as authorities removed the shipping containers that had blocked roads around the capital since Sunday. The heavily fortified red zone was empty of protesters but several of their vehicles were left behind, including the charred remains of a truck from which Bushra had been leading the protests.
An Arab News survey of major parts of Islamabad showed traffic on the roads, and shops and businesses open. Shipping containers that had been blocking roads inside the city since last week and had been used to disconnect the city from major motorways and highways had been removed.
“Containers have been removed. Clean-up is ongoing. Security is back to routine,” said Dr. Abdulla Tabassam, a spokesperson for the Islamabad district administration.
Local resident Naubat Ali expressed relief that the situation was returning to normalcy in Islamabad.
“The situation this morning shows that the roads are completely cleared, and people are now moving freely," he told Reuters. "Residents appear to be satisfied.”
Pakistan's benchmark share index jumped more than 3% in early trade on Wednesday, recovering losses made on Tuesday when the index closed 3.6% down over the news of political clashes.
Information Minister Attaullah Tarar said the PTI had suffered a “major political failure,” saying their leaders had come to free Khan from jail but ended up with getting many of his supporters arrested.
“This has become a major political failure for them,” he added. “They have suffered significant losses and will not be able to recover from this.”
Khan, who was ousted from power in a parliamentary no-trust vote in 2022, has been in prison since last year. He faces a slew of charges from terrorism to corruption that he says are politically motivated to keep him in jail and away from politics. The charges kept Khan away from Feb. 8 general elections that his party says were rigged, an accusation denied by the election commission.
Threats from Middle East conflict affecting Pakistan maritime security needs — naval chief
- Says Iran’s standoff with US and Israel may manifest into “precarious situation” for ships plying along Sea Lines of Communication
- Pakistan has recently inducted PNS Babur and PNS Hunain, two state-of-the-art warships, into its fleet to enhance maritime security
KARACHI: Pakistani Naval Chief Admiral Naveed Ashraf said this week growing regional threats due to the conflict in the Middle East had necessitated a “robust, adaptive, and technologically advanced” navy and pushed Islamabad to reevaluate its maritime security needs.
Pakistan has recently inducted PNS Babur and PNS Hunain, two state-of-the-art warships, into its fleet as part of a broader effort to enhance its maritime security and operational readiness.
In an interview with the Naval News website, Admiral Ashraf explained the effects on naval technologies of a changing regional geopolitical environment due to the “ongoing Israel-Gaza conflict with its butterfly effect in Yemen and Iran.”
“The already volatile maritime security environment coupled with a diverse range of traditional and non-traditional maritime threats necessitates a robust, adaptive, and technologically advanced Navy with well-trained HR,” he said.
“Therefore, since assuming command as Chief of the Naval Staff, the most pressing challenge was to boost combat readiness through optimal utilization of resources and completion of ongoing Projects under financial constraints in order to boost the Pakistan Navy’s prowess in the increasingly complex maritime security environment in the region.”
Admiral Ashraf said Pakistan was in the midst of complex geo-political and geo-economic competition prevailing in the region and its maritime security was intertwined with the maritime environment in the Indian Ocean, which was rapidly transforming.
“In our immediate neighborhood, long-drawn instability in Afghanistan simmers and continues to impinge upon regional security. On our eastern side, India is disturbing regional peace by blatantly provoking its neighbors,” the officer said.
“On our Western flank, Iran’s standoff with the US and Israel may manifest into a precarious situation for the shipping plying along the international Sea Lines of Communication (SLOCs).”
The ongoing Israel-Hamas conflict, with a spillover in the maritime arena after missile strikes by Houthis on merchant traffic and counter strikes on the Yemen mainland by the US-led West, had created conditions for enhanced ERF presence in the region, Ashraf said, referring to Engine Reliability Fix (ERF), a Naval Aviation Enterprise initiative that aims to improve the lifespan of engines on various aviation platforms.
“Access to shore-based missiles and remotely operated vehicles to the warring groups is a serious threat to SLOCs transiting the Red Sea and the Gulf of Aden,” he added.
In the non-traditional domain, maritime terrorism, piracy, drug trafficking, gun running and human smuggling were other challenges, Admiral Ashraf said, describing Pakistan’s regional maritime security as an “ominous hybrid mix of traditional and non-traditional threats.”
“Operationally, we believe in hybrid approach that combines manned and unmanned systems for naval operations,” he added.
“This strategy enables us to leverage the strengths of both types of platforms, optimizing operational flexibility and effectiveness. By integrating unmanned technologies with traditional manned systems, what I have observed is that operational gaps have been duly addressed, especially with regards to surveillance while substantially cutting repair/ maintenance and operating costs.”
