The Asia-Pacific region risks a damaging financial crisis from a surge of non-performing loans caused by rising insolvencies, a senior official from the World Bank Group's private sector arm said on Thursday.
JAKARTA - The Asia-Pacific region risks a damaging financial crisis from a surge of non-performing loans caused by rising insolvencies, a senior official from the World Bank Group’s private sector arm said on Thursday.
While many firms have been given moratoriums on their loan repayments, many central banks are not requiring financial institutions to regularly monitor these firms’ solvency. This, said Garcia Mora, was “very dangerous”. About 50% of firms will not have enough income to service their loans in the coming year, Garcia Mora said, citing an analysis by the World Bank and the Bank for International Settlements.
Globally, the World Bank has estimated 100 million people to fall into “extreme poverty”, where they earn $1.90 a day or less. About half of the newly poverty-stricken will come from the Asia-Pacific, mostly in South Asia, Garcia Mora said.
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