Adedokun Waliyu 
The external debt of developing countries in 2025 jumped at its fastest pace since the pandemic, hitting a record $9.4 trillion, the World Bank said.
Most of the increase was driven by private financing, with borrowing from private creditors and bond issuance by public enterprises rising nearly 35 per cent, the Bank’s annual International Debt Report showed.
External debt grew the most among developing countries that the Bank classified as “the most vulnerable”.
“Access to international finance has improved, but the price of finance has not, and high debt burdens in the poorest countries threaten to crowd out essential investments in people,” the Bank said in a statement.
Haishan Fu, chief statistician at the World Bank Group, said the return of private lending to low- and middle-income countries was “welcome, but these countries are borrowing more, paying more, and in many cases leaving less for long-term development”.
The report highlighted how many governments had issued new bonds to buy back maturing debt, effectively kicking the debt can down the road, often at higher interest rates.
Private lenders tend to offer higher interest rates for loans than multilateral financial institutions such as the World Bank or International Monetary Fund.
According to the Bank’s data, the poorest countries paid an average of 8.2 per cent on new loans or bonds to the private sector, the highest rate for that category since 1989.
“Debt-service pressures remained severe amid elevated global interest rates,” the Bank’s statement said.
Low- and middle-income countries paid $1.4 trillion in loan and interest repayments in 2025, up 1.9 per cent and marking a fifth consecutive annual increase.
The report showed that between 2022 and 2025, developing countries paid $436 billion more in debt servicing than they received in new financing.
Fu warned that with the global economy more prone to shocks, having faced the pandemic, inflation driven by wars in Ukraine and Iran, and an upended global trade order due to US tariffs, high debt levels had left developing countries even more constrained in their response.
