The poorest countries eligible to borrow from the World Bank’s International Development Association (IDA) are spending more than a tenth of their export revenue to pay off debt, a report has found.
This is the highest proportion since 2000, the World Bank’s new International Debt Report showed.
At the end of last year, IDA-eligible countries’ debt-service payments on long-term public and publicly guaranteed external debt reached $46.2 billion — equivalent to 10.3 per cent of their exports of goods and services and 1.8 per cent of their gross national income (GNI), the report said.
The percentages were up significantly from 2010, when they stood at 3.2 per cent and 0.7 per cent, respectively.
This year, IDA countries’ debt-service payments on their public and publicly guaranteed debt are projected to rise by 35 per cent on a yearly basis to more than $62 billion, one of the highest annual increases of the past two decades.
China, Asia’s largest economy, is expected to account for 66 per cent of the debt-service payments to be made by IDA countries on their official bilateral debt.
Eligibility for IDA support depends on a country’s relative poverty, defined as GNI per capita below an established threshold, and it is updated annually. It is set at $1,255 in the fiscal year 2023.
IDA also supports some countries that are above the operational cut-off but lack the creditworthiness needed to borrow. Nearly 75 countries, including Afghanistan, Ghana, Yemen and Ethiopia, are currently eligible to receive IDA resources.
At the end of last year, the external debt of all developing economies — low as well as middle-income economies — stood at $9 trillion, more than double the amount a decade ago, the report said. However, the total external debt of IDA countries nearly tripled to $1 trillion during the period.
The debt crisis facing developing countries has “intensified”, said David Malpass, president of the World Bank Group.
“A comprehensive approach is needed to reduce debt, increase transparency and facilitate swifter restructuring … so countries can focus on spending that supports growth and reduces poverty," he said.
“Without it, many countries and their governments face a fiscal crisis and political instability, with millions of people falling into poverty."
Inflation has continued to push interest rates and funding costs higher globally while governments have stepped up spending to shore up economies.
The International Monetary Fund expects global inflation to peak late this year at 8.8 per cent and to remain elevated for longer than previously expected, before decreasing to 4.1 per cent by 2024. The fund estimates inflation at 6.5 per cent next year.
Rising interest rates and slowing global growth risk tipping many countries into debt crises. About 60 per cent of the poorest countries are already at high risk of debt distress or are already in distress, the World Bank report said.
For IDA countries, the debt-to-GNI ratio remained above the pre-pandemic level at 25 per cent.
However, the economic outlook has deteriorated considerably.
The risk of a global recession next year has been rising, the report said, adding that the currency depreciations have made matters worse for many developing countries whose debt is denominated in US dollars.
The composition of debt has also changed significantly.
At the end of last year, low and middle-income economies owed 61 per cent of their public and publicly guaranteed debt to private creditors — an increase of 15 percentage points from 2010.
The IDA-eligible countries owed 21 per cent of their external debt to private creditors by the end of last year, a 16-point increase from 2010.
China was the largest bilateral lender to IDA countries, accounting for nearly half of their bilateral debt stock by the end of last year, up from 18 per cent in 2010.
“These developments have made it much harder for countries facing debt distress to quickly restructure their debt,” the report said.
A comprehensive approach is needed to reduce debt, increase transparency and facilitate swifter restructuring … so countries can focus on spending that supports growth and reduces poverty
David Malpass,
president of World Bank Group
The World Bank also emphasised the need to improve transparency and provide more information to strengthen countries’ ability to manage debt risks, using resources efficiently for sustainable development.
“Poor debt transparency is the reason so many countries sleepwalk into a debt crisis,” said Indermit Gill, senior vice president and chief economist of the World Bank Group.
“Complete, transparent debt data improves debt management. It makes debt sustainability analyses more reliable. And it makes debt restructurings easier to implement, so that countries can return quickly to economic stability and growth."
In the past five years, the World Bank’s international debt statistics database has identified and added $631 billion of previously unreported loan commitments, with an additional $44 billion identified last year.
The total of these newly documented additional loan commitments in the past five years is equivalent to more than 17 per cent of the total outstanding public and publicly guaranteed debt stock last year.
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Emirates (www.emirates.com) flies directly to Hanoi, Vietnam, with fares starting from around Dh2,725 return, while Etihad (www.etihad.com) fares cost about Dh2,213 return with a stop. Chuong is 25 kilometres south of Hanoi.
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The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
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The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
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High profile Al Shabab attacks
- 2010: A restaurant attack in Kampala Uganda kills 74 people watching a Fifa World Cup final football match.
- 2013: The Westgate shopping mall attack, 62 civilians, five Kenyan soldiers and four gunmen are killed.
- 2014: A series of bombings and shootings across Kenya sees scores of civilians killed.
- 2015: Four gunmen attack Garissa University College in northeastern Kenya and take over 700 students hostage, killing those who identified as Christian; 148 die and 79 more are injured.
- 2016: An attack on a Kenyan military base in El Adde Somalia kills 180 soldiers.
- 2017: A suicide truck bombing outside the Safari Hotel in Mogadishu kills 587 people and destroys several city blocks, making it the deadliest attack by the group and the worst in Somalia’s history.
Multitasking pays off for money goals
Tackling money goals one at a time cost financial literacy expert Barbara O'Neill at least $1 million.
That's how much Ms O'Neill, a distinguished professor at Rutgers University in the US, figures she lost by starting saving for retirement only after she had created an emergency fund, bought a car with cash and purchased a home.
"I tell students that eventually, 30 years later, I hit the million-dollar mark, but I could've had $2 million," Ms O'Neill says.
Too often, financial experts say, people want to attack their money goals one at a time: "As soon as I pay off my credit card debt, then I'll start saving for a home," or, "As soon as I pay off my student loan debt, then I'll start saving for retirement"."
People do not realise how costly the words "as soon as" can be. Paying off debt is a worthy goal, but it should not come at the expense of other goals, particularly saving for retirement. The sooner money is contributed, the longer it can benefit from compounded returns. Compounded returns are when your investment gains earn their own gains, which can dramatically increase your balances over time.
"By putting off saving for the future, you are really inhibiting yourself from benefiting from that wonderful magic," says Kimberly Zimmerman Rand , an accredited financial counsellor and principal at Dragonfly Financial Solutions in Boston. "If you can start saving today ... you are going to have a lot more five years from now than if you decide to pay off debt for three years and start saving in year four."
UAE currency: the story behind the money in your pockets
Specs%20
%3Cp%3E%3Cstrong%3EPower%20train%3A%20%3C%2Fstrong%3E4.0-litre%20twin-turbo%20V8%20and%20synchronous%20electric%20motor%3Cbr%3E%3Cstrong%3EMax%20power%3A%20%3C%2Fstrong%3E800hp%3Cbr%3E%3Cstrong%3EMax%20torque%3A%20%3C%2Fstrong%3E950Nm%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3EEight-speed%20auto%3Cbr%3E%3Cstrong%3EBattery%3A%20%3C%2Fstrong%3E25.7kWh%20lithium-ion%3Cbr%3E0-100km%2Fh%3A%203.4sec%3Cbr%3E0-200km%2Fh%3A%2011.4sec%3Cbr%3E%3Cstrong%3ETop%20speed%3A%20%3C%2Fstrong%3E312km%2Fh%3Cbr%3E%3Cstrong%3EMax%20electric-only%20range%3A%3C%2Fstrong%3E%2060km%20(claimed)%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20Q3%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh1.2m%20(estimate)%3Cbr%3E%3Cbr%3E%3C%2Fp%3E%0A
Company%20Profile
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The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
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What drives subscription retailing?
Once the domain of newspaper home deliveries, subscription model retailing has combined with e-commerce to permeate myriad products and services.
The concept has grown tremendously around the world and is forecast to thrive further, according to UnivDatos Market Insights’ report on recent and predicted trends in the sector.
The global subscription e-commerce market was valued at $13.2 billion (Dh48.5bn) in 2018. It is forecast to touch $478.2bn in 2025, and include the entertainment, fitness, food, cosmetics, baby care and fashion sectors.
The report says subscription-based services currently constitute “a small trend within e-commerce”. The US hosts almost 70 per cent of recurring plan firms, including leaders Dollar Shave Club, Hello Fresh and Netflix. Walmart and Sephora are among longer established retailers entering the space.
UnivDatos cites younger and affluent urbanites as prime subscription targets, with women currently the largest share of end-users.
That’s expected to remain unchanged until 2025, when women will represent a $246.6bn market share, owing to increasing numbers of start-ups targeting women.
Personal care and beauty occupy the largest chunk of the worldwide subscription e-commerce market, with changing lifestyles, work schedules, customisation and convenience among the chief future drivers.
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if you go
The flights
Air Astana flies direct from Dubai to Almaty from Dh2,440 per person return, and to Astana (via Almaty) from Dh2,930 return, both including taxes.
The hotels
Rooms at the Ritz-Carlton Almaty cost from Dh1,944 per night including taxes; and in Astana the new Ritz-Carlton Astana (www.marriott) costs from Dh1,325; alternatively, the new St Regis Astana costs from Dh1,458 per night including taxes.
When to visit
March-May and September-November
Visas
Citizens of many countries, including the UAE do not need a visa to enter Kazakhstan for up to 30 days. Contact the nearest Kazakhstan embassy or consulate.
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Make Smart Cool is not your usual festival. Dubbed “edutainment” by organisers Najahi Events, Make Smart Cool aims to inspire its youthful target audience through a mix of interactive presentation by social media influencers and a concert finale featuring Example with DJ Wire. Here are some of the speakers sharing their inspiration and experiences on the night.
Prince Ea
With his social media videos accumulating more half a billion views, the American motivational speaker is hot on the college circuit in the US, with talks that focus on the many ways to generate passion and motivation when it comes to learning.
Khalid Al Ameri
The Emirati columnist and presenter is much loved by local youth, with writings and presentations about education, entrepreneurship and family balance. His lectures on career and personal development are sought after by the education and business sector.
Ben Ouattara
Born to an Ivorian father and German mother, the Dubai-based fitness instructor and motivational speaker is all about conquering fears and insecurities. His talk focuses on the need to gain emotional and physical fitness when facing life’s challenges. As well managing his film production company, Ouattara is one of the official ambassadors of Dubai Expo2020.
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The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
