By Andrea Shalal
WASHINGTON (Reuters) – Existing systems for tracking the sovereign debt of poorer countries are inadequate and mask hidden debts, and those economies are likely to owe far more than currently estimated record levels, said World Bank chief economist Carmen Reinhart.
The multilateral development bank on Wednesday released the first comprehensive assessment of global and national debt surveillance systems, saying it found “huge gaps” in its ability to track how much each country owes and to whom.
The current patchwork of databases – with different standards and definitions – means that debt estimates can be wrong by up to 30% of a country’s Gross Domestic Product (GDP), the report concluded, noting that 40% of countries low-income groups have not released data on their sovereign debt for more than two years.
The World Bank, long critical of the lending practices of China, the world’s biggest lender, said last month that the debt burden of low-income countries rose 12% to a record $860 billion in 2020, and it called for comprehensive efforts to help low- and middle-income countries achieve more sustainable debt levels.
Reinhart told Reuters that the actual number could be “markedly higher” and that the new study underscored the need for reforms to ensure better debt statistics, coordinated data collection and integrated debt management systems.
The bank estimates that 12% of low-income countries are already in debt and 44% are at high risk of getting there.
(By Andrea Shalal)
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