Debt in Middle East, North Africa swells due to COVID-19: World Bank

MENA

Published: 2021-04-03 08:58

Last Updated: 2021-04-17 11:17


Source: UN News
Source: UN News

The World Bank warned in a report Friday that the public debt Middle East and North African countries will inflate and account for 54 percent of their GDP this year, compared to 46 percent in 2019, due to expenditures related to COVID-19.

The World Bank said that countries in the Middle East and North Africa region witnessed a "significant increase in their debts" due to their being forced to "borrow heavily" to finance "basic care costs and social protection measures."

He explained that the size of the debt of oil-importing countries in the region will constitute a percentage that could reach 93 percent of their GDP in 2021.

The region, which includes about 20 countries, saw its economy shrink by 3.8 percent last year. The World Bank estimates the cumulative decline in activity in the region by the end of 2021 at $227 billion. But he expects a partial recovery this year "provided that there is a fair distribution of vaccines."

Despite the inflation of debts, the World Bank still recommends countries to spend to address the health crisis, stressing that "continuing spending and continuing to borrow will remain an urgent necessity at the present time."

"Countries in the MENA region will have no choice but to continue spending on health care and social protection as long as the pandemic continues," he added.

However, this international financial institution warned that "in the post-pandemic world," it is expected that "most countries in the MENA region will end up with debt service bills that will require resources that could have been used for economic development."

The World Bank expects that it will be necessary to consider how to "reduce the costs of excessive indebtedness in the medium term," calling on countries to be transparent in their spending and borrowing in relation to COVID-19.