A new report from the World Bank released on Sunday highlights that the world's 26 poorest countries, which are home to 40% of the most impoverished individuals, are experiencing their highest levels of debt since 2006.

These nations are also increasingly susceptible to natural disasters and other shocks.

The findings reveal that, on average, these economies are currently in a worse financial position than they were just before the COVID-19 pandemic, even as most of the globe has bounced back and returned to a growth path.

Published just a week before the annual meetings of the World Bank and International Monetary Fund in Washington, this report signifies a significant setback in the battle against extreme poverty.

It also emphasizes the World Bank’s goal to secure $100 billion this year to replenish the International Development Association (IDA), which funds the world’s poorest countries.

The economies studied, each with an annual per-capita income below $1,145, are increasingly dependent on IDA grants and loans with near-zero interest rates, as traditional market financing options have largely disappeared.

The average debt-to-GDP ratio for these countries has reached 72%, the highest level in 18 years, with half of them either in debt distress or at a high risk of it.

Additionally, two-thirds of these nations are grappling with armed conflict or struggling to maintain order due to institutional and social instability, which hampers foreign investment.

Most of them rely heavily on commodity exports, making them vulnerable to frequent economic fluctuations.

“At a time when much of the world simply backed away from the poorest countries, IDA has been their lifeline,” World Bank chief economist Indermit Gill said in a statement.

“Over the past five years, it has poured most of its financial resources into the 26 low-income economies, keeping them afloat through the historic setbacks they suffered.”

The International Development Association (IDA) is typically replenished every three years through contributions from countries that hold shares in the World Bank.

In 2021, it achieved a record funding level of $93 billion, and World Bank President Ajay Banga is striving to surpass that figure, aiming for over $100 billion in pledges by December 6.

Over the past decade, natural disasters have increasingly impacted these countries. From 2011 to 2023, they experienced average annual losses equivalent to 2% of their GDP due to natural calamities—five times higher than the average loss faced by lower-middle-income countries.

This situation underscores the urgent need for significantly greater investments, according to the World Bank.

The report also emphasizes that these nations, which feature large informal sectors operating outside their taxation systems, need to take proactive measures for their own improvement.

It suggests enhancing tax collection efforts by simplifying taxpayer registration and streamlining tax administration processes, as well as increasing the efficiency of public spending.