World Bank’s chief economist sees more debt distress risks

The list of emerging-markets countries facing debt distress is quickly mounting as global interest rates rise, according to World Bank Group Chief Economist Carmen Reinhart.

“With the low income countries, debt risks and debt crises are not hypothetical. We’re pretty much already there,” Reinhart told Bloomberg Television Tuesday.

“Debt crises need to be resolved through meaningful debt reduction. If not, it’s a band-aid and it’s a band-aid that wears off very quickly.”

The remarks follow a similar warning from Goldman Sachs Group Inc. that emerging markets are entering a new cycle of defaults, with Sri Lanka probably the first of several on the horizon. Russia defaulted on its foreign-currency sovereign debt on Monday.

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