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
Pakistan to implement new energy market system from March, relinquishing government control
- New system enables consumers to buy power from multiple suppliers, moving away from government-controlled system
- Pakistan's energy sector has long struggled with financial strain due to circular debt, power theft and transmission losses
Islamabad: Pakistan’s Energy Minister Awais Ahmad Khan Leghari said this week electricity consumers will be able to buy power from multiple suppliers starting March, as the government moves to implement a new energy market system.
Pakistan’s Cabinet Committee on Energy last October approved the formation of an independent entity to reform Pakistan’s energy market. The new system enables consumers to buy power from multiple suppliers, moving away from the current government-controlled system, where it is the sole buyer of electricity.
Pakistan’s energy sector has long struggled with financial strain due to circular debt, power theft and transmission losses, which have led to blackouts and high electricity costs.
“The National Assembly was informed today (Wednesday) that the government will not purchase electricity after March this year as authorization has been given for the creation of an Independent Electricity Market,” state broadcaster Radio Pakistan reported on Wednesday.
Leghari told the lower house of parliament during the National Assembly session’s Question Hour that the Independent Electricity Market will enable consumers to purchase electricity from multiple suppliers.
Pakistan’s government expects the move will reduce the country’s circular debt and stabilize electricity prices, which along with food prices, pushed inflation to a record 38 percent high in May 2023.
The federal cabinet this week also approved a plan to renegotiate agreements with 14 independent power producers (IPPs), another move aimed at lowering electricity costs and addressing the mounting circular debt.
The main issue between the government and the IPPs were capacity charges, or payments made to IPPs regardless of electricity consumption, which have exacerbated circular debt, now exceeding Rs2.4 trillion ($8.6 billion), as per the energy minister.
Pakistan says revised contracts will save the government Rs1.4 trillion ($5 billion) over their duration, translating into annual savings of Rs137 billion ($493.2 million) for consumers.
The government’s renegotiation efforts were influenced by the International Monetary Fund’s reform recommendations, which seek to reduce tariffs and capacity payments to ease fiscal pressure.
Pakistan raises alarm over Yemen airstrikes, links conflict to overall Middle East situation
- Ambassador Munir Akram expresses concern over Houthi attacks in the Red Sea at the Security Council
- He reiterates Pakistan’s stance that the conflict in Yemen should be resolved through political means
ISLAMABAD: Pakistan’s top diplomat at the United Nations raised concerns over airstrikes in Yemen during a Security Council briefing on Wednesday, emphasizing the need to view the conflict in the context of the volatile situation across the Middle East.
The United States and Israel launched aerial attacks in Yemen in recent weeks, targeting positions held by the Houthis, a faction that controls much of northern Yemen, including the capital Sanaa.
The strikes were said to be in response to Houthi attacks on commercial ships in the Red Sea and a series of missile and drone strikes against Israel, including a projectile intercepted near central Israel.
The Houthis have described their actions as a commitment to the Palestinian resistance, expressing solidarity with Gaza and Lebanon in the face of Israeli military operations.
A senior UN official noted during the briefing that the conflict in Yemen was increasingly becoming internationalized due to the involvement of external actors.
“Pakistan is deeply concerned on the airstrikes in Yemen,” Ambassador Munir Akram said during his comments to the Security Council. “Israeli airstrikes on Yemen’s civilian infrastructure, including Sana’a International Airport, Red Sea ports and power stations have caused civilian casualties, further exacerbating the dire humanitarian and political crises in Yemen.”
“We are also deeply concerned over Houthi attacks on commercial and maritime vessels in the Red Sea, which threaten global trade, regional stability and the environment,” he added.
Focusing on Yemen’s internal situation, the Pakistani diplomat highlighted the progress made during the December 2023 peace negotiations, which resulted in agreements on a nationwide ceasefire, economic revival initiatives, resuming oil exports and ensuring the payment of public sector salaries.
“It is crucial to preserve these gains, establish a roadmap and fully implement commitments to foster sustainable peace,” he emphasized.
Hans Grundberg, Special Envoy of the Secretary-General for Yemen, also urged for “immediate de-escalation and genuine engagement for peace,” noting that nearly 40 million Yemenis had long awaited a peaceful environment to rebuild their lives.
Ambassador Akram reiterated Pakistan’s stance that the conflict in Yemen should be resolved through diplomatic and political means.
“Pakistan urges all parties to prioritize dialogue, engage in a Yemeni-led and Yemeni-owned political process, and resolve differences through peaceful means,” he said.
South Africa’s injured Nortje ruled out of Pakistan-hosted Champions Trophy
- Nortje has played in 19 Tests, 22 one-day internationals and 42 T20 internationals for South Africa
- Replacement for Nortje, named in South Africa’s 15-man squad on Tuesday, will be announced soon
JOHANNESBURG: Fast bowler Anrich Nortje was on Tuesday ruled out of the Champions Trophy because of a back injury.
The latest injury setback for the 31-year-old was announced by Cricket South Africa a day after he was named in his country’s 15-man squad for the tournament in Pakistan next month.
Nortje, at his peak the fastest bowler in international cricket, underwent a scan on Monday, according to a statement by CSA, “which revealed the extent of the injury.”
The statement did not specify the exact nature of the injury.
Nortje, who has played in 19 Tests, 22 one-day internationals and 42 T20 internationals, has not played any international cricket since the final of the T20 World Cup in Barbados last June.
He had been in line to make a comeback against Pakistan last month but suffered a broken toe while batting in the nets.
Nortje was also ruled out of the ongoing SA20 franchise competition in which he was due to play for Pretoria Capitals.
CSA said a replacement would be named later.
Pakistan polio program says 72 cases reported in 2024
- Seventy-second polio case reported in female child from northwestern Dera Ismail Khan district
- Pakistan polio program is scheduled to hold first nationwide vaccination drive of 2025 from Feb. 3
KARACHI: Pakistan’s polio program on Wednesday confirmed another poliovirus infection from last year, taking the tally of total cases reported in 2024 to 72 amid Islamabad’s attempts to stem the spread of the disease.
Polio is a paralyzing disease that has no cure. Multiple doses of the oral polio vaccine and completion of the routine vaccination schedule for all children under the age of five is essential to provide children high immunity against this terrible disease.
The Regional Reference Laboratory for Polio Eradication at the National Institute of Health confirmed the 72nd case in a female child from the northwestern Dera Ismail Khan district.
“The onset of this case was on December 31, 2024,” the program said in a statement. “D.I. Khan has now reported 11 polio cases in 2024.”
Giving a breakdown of the cases reported in 2024, the program said 27 cases were reported from Balochistan, 22 from Khyber Pakhtunkhwa, 21 from Sindh, and one each from Punjab and Islamabad.
Pakistan, along with neighboring Afghanistan, remains the last polio-endemic country in the world. In the early 1990s, Pakistan reported around 20,000 cases annually but in 2018 the number dropped to eight cases. Six cases were reported in 2023 and only one in 2021.
Pakistan’s polio eradication efforts have met several challenges in recent years, including attacks by militants and misinformation by religious hard-liners.
The Pakistan polio program is scheduled to hold the country’s first nationwide vaccination drive of this year from Feb. 3 till Feb. 9.
“It is crucial for parents to ensure vaccination for all their children under the age of five to keep them protected,” it said.
Senior Bangladeshi army official, on rare visit to Pakistan, continues high-level meetings in Islamabad
- Lt. Gen. S M Kamr-ul-Hassan, principal staff officer of Bangladesh’s armed forces, meets Pakistan’s air chief
- Both discuss enhancing military partnerships via joint trainings, exchange initiatives amid thaw in relations
ISLAMABAD: A senior Bangladesh army official continued his high-level meetings with Pakistan’s military leadership on Wednesday, calling on Air Chief Marshal Zaheer Ahmed Baber Sidhu to discuss bilateral collaboration, a day after he met Pakistan Army’s chief to discuss regional security.
Lt. Gen. S M Kamr-ul-Hassan, principal staff officer (PSO) of the Armed Forces Division of Bangladesh, arrived in Pakistan this week and met the country’s senior military commanders, including Army Chief General Syed Asim Munir, on Tuesday. Pakistan’s military said Hassan and Munir both agreed during the meeting that their countries must remain resilient against “external influences.”
Pakistan and Bangladesh were once one nation, but they split in 1971 after a bloody civil war, which saw the part previously referred to as East Pakistan seceding to form the independent nation of Bangladesh.
In the years since, Bangladeshi leaders, particularly former prime minister Sheikh Hasina, chose to maintain close ties with India, Pakistan’s arch-rival. Ties between Pakistan and Bangladesh have warmed up since Hasina’s ouster as a result of a student-led uprising in August 2024, witnessing a marked improvement.
“A high-level defense delegation of Bangladesh led by Lt. Gen. S M Kamrul Hassan, Principal Staff Officer, Armed Forces Division, Bangladesh, called on Air Chief Marshal Zaheer Ahmed Baber Sidhu, Chief of the Air Staff, Pakistan Air Force at Air Headquarters Islamabad,” Pakistan military’s media wing said.
Sindhu reaffirmed his commitment to enhancing military partnership between the two air forces through joint training initiatives, the Pakistani military said. It added that the two sides agreed to explore collaboration avenues, including exchange initiatives and joint trainings.
It said Gen. Hassan lauded Pakistan Air Force’s innovative projects, cutting-edge technologies and indigenously developed technological framework.
“He expressed profound interest in sophisticated military hardware being developed, notably the JF-17 Thunder fighter jets,” the statement said.
Amid the thaw in relations between the two countries, Pakistan and Bangladesh signed a landmark agreement to establish a joint business council in Dhaka on Tuesday.
The Pakistani business delegation held meetings with their counterparts in Bangladesh during their Dhaka visit to discuss ways to enhance trade ties. The Trade Corporation of Pakistan also signed a memorandum of understanding for rice export to Bangladesh on Tuesday.
Pakistan’s Deputy Prime Minister Ishaq Dar is also scheduled to visit Dhaka in the beginning of February to further consolidate the relations between the two countries.
