WASHINGTON (Reuters) – The World Bank on Monday warned of a significant 12 percent rise in the debt burden of the world’s low-income countries to a record $860 billion in 2020 as a result of the COVID-19 pandemic, and called for urgent efforts to reduce debt levels.

World Bank President David Malpass told reporters the bank’s International Debt Statistics 2022 report showed a dramatic increase in the debt vulnerabilities facing low- and middle-income countries; he also urged for comprehensive efforts to help countries reach more sustainable debt levels.

“We need a comprehensive approach to the debt problem, including debt reduction, swifter restructuring and improved transparency,” Mr. Malpass said in a statement accompanying the new report.

He said half of the world’s poorest countries were in external debt distress or at high risk of it.

Mr. Malpass said sustainable debt levels were needed to help countries achieve economic recovery and reduce poverty.

The report said the external debt stocks of low- and middle-income countries combined rose 5.3 percent in 2020 to $8.7 trillion, affecting countries in all regions.

It said the rise in external debt outpaced gross national income (GNI) and export growth, with the external debt-to-GNI ratio, excluding China, rising five percentage points to 42 percent in 2020, while their debt-to-export ratio surged to 154 percent in 2020 from 126 percent in 2019.

Carmen Reinhart, the World Bank’s chief economist, said the challenges facing highly indebted countries could get worse as interest rates rose.