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The 26 poorest countries in the world are facing increased debt levels that surpass those seen since 2006, leaving them more vulnerable to shocks like natural disasters, as highlighted in a recent World Bank report. These countries, which are home to 40% of the most poverty-stricken individuals, have seen their economies worsen, with average per-capita incomes declining compared to pre-COVID levels. Despite the global recovery from the pandemic, these countries continue to struggle, with many relying on grants and loans from the International Development Association (IDA) as market financing remains limited. With a debt-to-GDP ratio at an 18-year high and half of these countries at risk of debt distress, the need for support is urgent.

The report also emphasizes the challenges faced by these nations, including conflicts, institutional fragility, and reliance on commodity exports, leading to economic instability. The IDA has been a crucial source of support for these countries, providing essential financial resources to help them navigate setbacks. Efforts are underway to replenish the IDA fund with a target of over $100 billion in pledges to address the pressing needs of the most vulnerable nations. Natural disasters have further exacerbated the situation, causing significant economic losses, underscoring the need for increased investment. The report recommends that these countries take steps to improve their tax systems and public spending efficiency to enhance self-reliance and resilience in the face of challenges.

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