Developing countries’ external debt hits record $9.4tn — World Bank

External debt in developing countries reached a record $9.4tn in 2025, according to the World Bank's International Debt Report 2026. Governments increased borrowing from private lenders and international bond markets, while higher interest rates boosted the cost of servicing their debts. The World Bank warned that rising borrowing costs and mounting debt-service obligations were straining public finances, particularly in the poorest countries.

Debt expanded fastest among those eligible for concessional financing, rising by 8.1% to $1.3tn. "The return of private lending to low- and middle-income countries is welcome," said Haishan Fu, World Bank Group Chief Statistician, "but these countries are borrowing more, paying more, and in many cases leaving less for long-term development."

Higher interest rates on new debt commitments averaged 8.2% for countries eligible for concessional financing, the highest since 1989, while bond issuances attracted an average rate of 9.4%. The cost of servicing existing debt also increased, with low- and middle-income countries paying $1.4tn in principal and interest in 2025, marking a 1.9% rise and the fifth consecutive annual increase.