BERLIN (Reuters) – The COVID-19 pandemic could trigger a debt crisis in some countries, so investors must be ready for granting some form of relief that could also include debt cancellation, World Bank President David Malpass was quoted as saying on Sunday.
“It is evident that some countries are unable to repay the debt they have taken on. We must therefore also reduce the debt level. This can be called debt relief or cancellation,” Malpass told Handelsblatt business daily in an interview.
“It is important that the amount of debt is reduced by restructuring,” Malpass added.
He pointed to similar steps in previous financial crises such as in Latin America and the so-called HIPC initiative for highly indebted countries in the 1990s.