Business · Economy · 10 hrs ago
Developing countries’ debt reaches record $9.4tn as borrowing costs rise
The external debt of developing countries reached a record $9.4tn in 2025, rising 5.5% from the previous year.
The World Bank says the poorest countries paid an average 8.2% interest on new loans, the highest level since 1989.
Private-sector lending grew rapidly, and developing countries’ new loans and government bond sales to private creditors rose to $251bn.
High debt costs leave governments less money for public needs, including education, health care, infrastructure and jobs.
The World Bank also found that heavily indebted countries were more exposed to food affordability problems during global shocks.
The UK plans to make debt a priority during its G20 presidency next year, and Prime Minister Andy Burnham has asked former prime minister Gordon Brown to examine possible changes to the global debt system.
Proposals could use development banks to reduce interest costs and extend repayment periods, but private creditors make debt relief more complex than it was in 2005.
External debt owed by low- and middle-income countries reached a record $9.4 trillion in 2025, up 5.5% from the previous year.
The World Bank said the increase was the fastest since 2021 and more than four times the average annual growth from 2022 to 2024.
Debt among countries eligible for concessional World Bank financing rose 8.1% to $1.3 trillion.
The poorest countries faced an average 8.2% interest rate on new borrowing, the highest since 1989.
Low- and middle-income countries paid $1.4 trillion in principal and interest in 2025, a 1.9% increase.
- Who
- Low- and middle-income countries, according to World Bank data.
- What
- Their external debt reached a record $9.4 trillion. Borrowing costs and debt-service payments also remained high.
- When
- In 2025, according to the World Bank’s annual debt report.
- Where
- Developing countries worldwide.
- Why
- The increase was driven in part by a rapid rise in private-sector lending. The sources say higher debt-servicing costs can limit investment in development.
This story does not have two clearly opposing sides.
External debt of low- and middle-income countries rose 5.5% to $9.4 trillion.
Countries eligible for concessional World Bank financing saw their debt rise 8.1% to $1.3 trillion.
Low- and middle-income countries paid $1.4 trillion in principal and interest repayments.
The World Bank’s debt figures were reported by news outlets.
- Total external debt
- $9.4 trillion in 2025
- Annual debt growth
- 5.5%
- Debt of IDA-eligible countries
- $1.3 trillion, up 8.1%
- Average interest on poorest countries’ new borrowing
- 8.2%, the highest since 1989
- Debt repayments
- $1.4 trillion in principal and interest during 2025
4 sources
What people are saying
Access to international finance has improved, but the price of that finance has not.
Food and nutrition security provides a concrete example of these interactions, illustrating how debt burdens may be closely associated with a decline in the affordability of a healthy diet during periods of global stress.