As Global Public Debt Hits $111tn, UNCTAD Raises Concerns over Investment Squeeze in Developing Countries

The United Nations Conference on Trade and Development (UNCTAD) has revealed that global public debt has skyrocketed to $111 trillion, up from $49 trillion in 2010. This surge in borrowing costs is placing significant pressure on developing countries' public finances, limiting resources for essential services such as health and education.

In UNCTAD's latest "World of Debt" report, it is noted that since 2022, interest payments on external public debt have surpassed net new lending to developing nations. Developing countries are bearing average public debt interest rates of 5.2%, compared to 2.2% in developed economies, leading to interest payments soaring from $363 billion in 2010 to nearly $1 trillion in 2025.

UNCTAD emphasizes that debt should be used to fund future investments, but in many developing nations, servicing external debt is now exceeding new inflows. If developing countries could borrow at rates similar to developed economies, they could save around $500 billion annually in interest payments. The report highlights that debt servicing in many developing countries has surpassed new external inflows, weakening debt's role as an investment tool.

UNCTAD urges reversing declines in official development assistance, expanding lending by multilateral and regional development banks, and increasing technical support to bolster national capacity. The Borrowers' Platform, a gathering of developing countries to tackle rising borrowing costs, is set to hold its first Governing Council meeting in Bangkok during the IMF-World Bank Annual Meetings.