Marcello Estevão World Bank Group - Global Director, Macroeconomics, Trade & Investment - Courtesy

Poor countries including South Sudan will struggle to pay debts in the next 12 months, the World Bank Group’s Global Director has said.

In a report published on the World Bank website on Monday, Marcello Estevão warned of what he called ‘a spate of debt crises’ over the next 12 months.

He said that the world’s poorest countries are increasingly becoming vulnerable.

This, he said, could be attributed to an increasing amount of variable rate debt taken by the developing countries.

Poor countries are defined as the 74 countries that are eligible for support from the International Development Association, which depends first and foremost on a country’s relative poverty, defined as gross national income, GNI per capita below an established threshold.

Estevão said that Russia’s invasion of Ukraine has exacerbated global economic risks. Other factors include the high debt of emerging markets and developing economies.

He added that the COVID-19 crisis expanded total indebtedness to a 50-year high—the equivalent of more than 250 percent of government revenues.

Estevão said that close to 60 percent of the poorest countries were already in debt distress or at high risk of it.

“In such conditions, history shows, one more surprise is all it takes to touch off a crisis. The Ukraine war immediately darkened the outlook for many developing countries that are major commodity importers or highly dependent on tourism or remittances”,

He said that across Africa, external borrowing costs are rising: bond spreads are up by an average of 20 basis points.

He warned that over the next 12 months dozen of developing economies could prove unable to service their debt.  

This month, the World Bank approved 34 million US dollars for South Sudan to support a new five-year Public Financial Management and Institutional Strengthening Project in the country.

In a statement dated march 4th, 2022, the world financial institution said the project aims to advance public financial management reforms, strengthen key oversight institutions, and improve budget transparency and outcomes in the country

Also, in March, South Sudan was listed by Business Insider Africa among the twenty countries with the highest debt-to-gross domestic product ratio in the continent.

Business Insider Africa said that South Sudan has a debt-to-GDP ratio of 64.4% as of 2022.

On March 20, the International Monetary Fund commended the government on how it spent the grants given to South Sudan more than a year ago.

Mr. Niko Hobdair concluded an 11-day visit to South Sudan to assess the usage of the Rapid Credit Facility grants within 15 months.

The International Monetary Fund had granted the Bank of South Sudan $225 million for economic reforms and to stabilize the exchange rate.