Developing-Country Debt Reaches a Record $9.4tn
The World Bank says debt owed by developing countries rose 5.5% last year to $9.4tn, with the poorest nations facing interest rates not seen since the late 1980s.
Poorer countries owe more than ever, and they pay more to borrow. The World Bank's latest figures show debt owed by developing countries reached a record $9.4tn (£7tn) last year.
What the World Bank found
The annual International Debt Report says that paying more to service external debt leaves some governments unable to invest ahead. Debt grew 5.5% last year. That is the fastest increase in four years, and the report ties it to a rapid rise in private sector lending.
The poorest countries are those eligible for concessional lending from the World Bank. On new borrowing they paid 8.2% on average, the steepest rate since the late 1980s. Early figures for 2026 suggest borrowing stayed brisk while rates stayed high because global financing got costlier.
Laos paid 11.5% on recent borrowing, the Republic of Congo 13.88% and Kenya 9.2%, the Bank said.
"Access to international finance has improved, but the price of that finance has not," said Haishan Fu, the Bank's chief statistician. She added that low- and middle-income countries are borrowing more and paying more, often leaving less for long-term development.
Debt and the cost of food
The report also looked at how debt burdens limit spending on domestic priorities. It found that global shocks had more impact on the availability of food in heavily indebted countries. It describes food and nutrition security as a concrete example. Debt burdens, it says, may be closely associated with a decline in the affordability of a healthy diet in times of global stress.
A British push on debt
The UK government plans to lead a fresh debt initiative when it holds the G20 presidency next year. Prime minister Andy Burnham has linked the move to confronting the legacy of slavery. He has asked former Labour prime minister Gordon Brown to examine whether changes to the global debt regime are feasible.
Foreign secretary Ed Miliband set out plans for a new deal for heavily indebted countries last month, in a speech at the IMF annual meetings in Bangkok. The deal is likely to include proposals to have the World Bank and other multilateral development banks put their own balance sheets behind buying back existing debt. The aim would be longer repayment periods and lower interest rates.
The situation is more complex than before the Gleneagles summit in 2005, when G8 countries agreed to write off billions of pounds of debt. Most of today's lenders are private bondholders rather than governments. Pressure to reform the international debt framework has built in recent years, voiced by African Union heads of state and during the G20 chairmanships of Brazil and South Africa.
Source: the Guardian