Debt Overload: A warning from the World Bank

World Bank warns of global debt crisis amid borrowing buildup
By Larry Elliott, Economics Editor
January 8, 2020
The Guardian
“Low global interest rates provide only a precarious protection against financial crises.”

The World Bank has highlighted the risk of a fresh global debt crisis after warning of the biggest buildup in borrowing in the past 50 years.

In its half-yearly Global Economic Prospects (GEP), the Washington-based organisation said of the four waves of debt accumulation since the 1970s, the latest was the largest, fastest and most broad-based.

The World Bank, which provides loans and grants to developing and emerging economies to help tackle poverty, said there could still be a financial crisis even though historically low interest rates were making debts more manageable.

“Low global interest rates provide only a precarious protection against financial crises,” said Ayhan Kose, a World Bank official. “The history of past waves of debt accumulation shows that these waves tend to have unhappy endings. In a fragile global environment, policy improvements are critical to minimise the risks associated with the current debt wave.”

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