The World Bank is mulling introducing a pause mechanism if low-income countries are hit by a crisis.
This is according to the multilateral lender’s President Ajay Banga who spoke in Paris during a two-day summit for a New Global Financing Pact.
He told a summit on financing the fight against climate change that the multilateral lender would adopt a new approach that “significantly expands the World Bank’s toolkit.”
The most important measure would be offering “a pause on debt repayments so countries can focus on what matters when a crisis hits and stop worrying about the bill that is going come,” he added.
The idea has been promoted by the prime minister of Barbados, Mia Mottley, who has become a leading champion for low-income countries as well as fellow low-lying island nations.
The World Bank, the sister organisation of the International Monetary Fund, is a top public lender for countries to finance their infrastructure and other projects.
The two-day Summit for a New Global Financing Pact in Paris has seen calls for major reform of the nearly 80-year-old institutions, with French President Emmanuel Macron calling them “not completely suited” to tackle current challenges.
United Nations Secretary-General Antonio Guterres said: “It is clear that the international financial architecture has failed in its mission to provide a global safety net for developing countries.”