Speaking last year, David Malpass, the current president of the World Bank and the former U.S. Treasury Undersecretary for International Affairs, gave an example of these opaque loans: Chinese loans to Venezuela were expressed in barrels of oil. He claimed that this had the effect of hiding the precise sum of money that China had paid Venezuelan officials and that the country’s citizens would likely pay China going forward.
In his remark, he declared, “You will not find China’s terms if you ask for them.”
During their annual spring meetings in April of this year, the World Bank and the IMF both demanded greater transparency over those loan amounts and terms.
In order for borrowers to make wise decisions, they require fast and thorough debt data. Additionally, it enables lenders to better control loan risks, which lowers lending costs for all borrowers, according to the statement.
Additionally, according to the international organization, debt transparency enables people to “hold their governments accountable.”
To put it briefly, debt transparency is crucial to economic growth. Therefore, when debts are “hidden,” it affects not just the World Bank or the IMF but also everyone else. Uncertainty can result in increased funding costs or, in the worst-case scenario, cut off funding, which is particularly problematic for the inhabitants of nations whose concealed debt is unexpectedly uncovered, according to a World Bank statement.