The World Bank calls on countries to develop transparency regarding public debt to prevent financial crises
In a report on Friday, the World Bank (WB) emphasized the importance of transparency in public debt data in developing countries to expand the scope and clarity of information on new loans.
Request to enhance auditing and publicly disclose loan details
The WB recommends that countries establish a legal framework requiring stakeholders to fully disclose data on loan contracts, including detailed information on debts. Additionally, countries need to conduct regular audits and disclose debt restructuring terms to create maximum transparency.
Meanwhile, guidance from the WB encourages lenders to expand commitments regarding loan terms and ensure the public disclosure of both original data and accompanying financial guarantees.
The current state of public debt data disclosure in developing countries
Less than 60% of low-income countries publicly disclosed detailed debt data in 2020, but this figure has increased to over 75% this year. However, only 25% of countries provide data on specific loans, as many countries use central bank transactions and decentralized frameworks which complicate reporting.
For example, Senegal faces challenges in using private loans to deal with unclear debt agreements with the IMF, while Cameroon, Gabon, and Angola have encountered 'off-screen' exceptional agreements and complex guarantees.
Public debt control policies and key considerations
The World Bank warns that a lack of transparency in public debt can lead to risks of default or tighter interest rate adjustments. Countries need to strengthen auditing efforts, enhance data transparency, and use analytical tools to avoid these potential risks.
FDI has sharply decreased, hitting the lowest level since 2005
According to the WB, foreign direct investment (FDI) has fallen to its lowest level since 2005 amidst increasing trade and investment barriers.
In 2023, developing economies attracted only 435 billion USD in FDI, while high-income countries achieved only 336 billion USD – the lowest level since 1996. This measure clearly reflects the stagnation of global capital flows.
Decline in FDI alongside soaring public debt
Mr. Indermit Gill, Chief Economist of the WB, stated that the decline of FDI is an inevitable consequence as governments tighten trade barriers, while public debt has reached record levels. He called for policy changes to promote cross-border investment again.
Investment promotion strategies in the current context
Governments and global financial institutions have begun discussions in Seville, Spain, from June 30 to July 3 on strategies to improve the investment environment, mitigate restrictions, and promote sustainable development projects.
Expert Ayhan Kose proposes decisive action to remove barriers limiting FDI and expedite investment project progress to enhance job creation, stabilize economic growth, and promote comprehensive development.
Source: https://tintucbitcoin.com/ngan-hang-the-gioi-yeu-cau-tiet-lo-no-an/
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