The pandemic forced many countries to take on more borrowing, and the World Bank and International Monetary Fund have warned that many are already facing or at risk of debt distress amid soaring global inflation and rising interest rates.
“I’m worried about the debt levels, worried about the individual countries,” Malpass told reporters.
“In 2022 alone, around $44 billion in debt service payments from bilateral and private debt service have become due” in some of the poorest countries, bigger than the foreign aid flows the countries could hope for, he said.
“Right now we’re in the midst of what I think is a fifth wave of debt crisis.”
Speaking days before policymakers gather in Washington for the annual meetings of the IMF and World Bank, Malpass called for “radically more transparency” from creditors and borrowers on the debt levels.
He has long called for China, a major creditor to low-income nations, to be more open about the lending and more active in efforts to restructure debt, a process that has struggled to gain traction.
His comments come at a difficult time for the world economy, which is grappling with surging inflation and rising interest rates that threaten to ripple around the globe and derail nascent recoveries.
Some observers have warned that aggressive interest rate hikes by major economies could trigger a global recession, but policymakers say allowing high inflation to take hold would be even worse.
“It’s very important, as we face these financial crises around the developing world, that we recognize the supreme importance of the advanced economies in terms of restoring growth and moving towards a faster growth environment,” Malpass said.
Developing countries also need more capital flows, and although the World Bank is expanding help for countries, it is “simply not enough,” he said.
According to the World Bank, there have been four waves of debt accumulation in the global economy since 1970, and have generally sparked financial crises in many emerging and developing economies.