As many as twelve countries could default on their loans this year, a senior World Bank economist warned in a blog post on Monday. Marcello Estevão, the WB’s Global Director for Macroeconomics, Trade and Investment, said the crisis in Ukraine is a final shock that could nudge many developing countries into crisis. This follows slowly-building debt crises (see graph) accelerated by the global pandemic.
He acknowledged that the G20’s Debt Service Suspension Initiative (DSSI) has largely failed as a tool to tide vulnerable economies over. However, he insisted that its successor, the Common Framework for Debt Treatments “is the only game in town,” despite the fact that only three countries have signed up to date.
