A new report from the World Bank reveals that the world's 26 poorest countries, home to 40% of the most impoverished people, are facing their highest debt levels since 2006, making them increasingly vulnerable to natural disasters and other global shocks. These economies, which have annual per-capita incomes of less than $1,145, are now poorer on average than they were before the COVID-19 pandemic, while the rest of the world has largely recovered and resumed growth.

The report comes just a week before the annual World Bank and International Monetary Fund meetings in Washington, highlighting a significant setback in global efforts to eradicate extreme poverty. The findings stress the importance of replenishing the International Development Association (IDA), the World Bank’s key fund for the poorest nations, with a $100 billion target set for December.

Most of the countries in the study, including Ethiopia, Chad, and the Democratic Republic of Congo, are located in sub-Saharan Africa, but the list also includes Afghanistan and Yemen. The report shows that their debt-to-GDP ratio has risen to an average of 72%, the highest in 18 years. Half of these nations are either in debt distress or at high risk of it, with natural disasters further compounding their economic struggles. Between 2011 and 2023, disasters caused average annual losses of 2% of GDP, five times higher than in lower-middle-income countries.

The study points out that two-thirds of these countries are grappling with armed conflicts or institutional fragility, deterring foreign investment. Many of them rely on commodity exports, leaving them exposed to volatile market cycles.

IDA, which provides grants and low-interest loans, has been a crucial financial lifeline for these nations. Over the last five years, it has significantly increased its funding to keep these economies afloat through multiple crises. The fund raised a record $93 billion in 2021, and World Bank President Ajay Banga aims to surpass $100 billion in new pledges by December 6.

The report urges these countries to improve tax collections and public spending efficiency as they seek long-term solutions to their financial woes. Simplifying tax administration and improving government spending were highlighted as critical reforms to help them reduce their reliance on external aid.