The World Bank has issued a warning stating that several low-income nations burdened with high debt levels are at risk of facing a financial “nightmare” when they attempt to refinance their bonds. These countries, already grappling with economic challenges and limited resources, may find it increasingly difficult to roll over their debt obligations successfully.
The World Bank’s caution comes as a result of the global economic downturn caused by the COVID-19 pandemic, which has pushed many countries into recession and increased their reliance on borrowing. The combination of high debt and limited financial resources means that these low-income nations may struggle to attract investors and obtain favorable terms when refinancing their bonds. As a result, they could face higher interest rates, increased borrowing costs, and potential defaults, driving them deeper into financial turmoil.
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