Developing countries’ debt climbed to a record $9.4tn in 2025, while the poorest nations faced their highest borrowing costs in nearly four decades, according to new World Bank figures highlighting the growing pressure on public finances.
The 5.5 per cent rise in debt owed by developing economies was the fastest increase in four years. A surge in lending from private creditors contributed to the growth, leaving governments with larger repayment obligations and less room to fund long-term development.
The World Bank’s annual International Debt Report found that countries eligible for its concessional financing paid an average interest rate of 8.2 per cent on new borrowing. Brandspur Banking News Desk reports that the rate was the highest recorded for the group since the late 1980s.
The figures also point to continued pressure in 2026. Preliminary data indicated that lending remained brisk, even as global financing costs kept interest rates elevated.
Recent borrowing highlighted by the Bank included Laos at 11.5 per cent, the Republic of Congo at 13.88 per cent and Kenya at 9.2 per cent.
The report warned that debt pressures can affect essential domestic spending. Its analysis linked heavier debt burdens with reduced affordability of healthy diets during periods of global disruption, raising concerns about food and nutrition security in vulnerable economies.
The findings come as the UK prepares to make debt reform a priority during its G20 presidency next year. Prime Minister Andy Burnham has appointed former prime minister Gordon Brown to examine possible changes to the international debt system, while Foreign Secretary Ed Miliband has proposed a new arrangement for heavily indebted countries.
The effort faces a more complicated creditor landscape than the debt relief initiative agreed by G8 countries in 2005. Private bondholders now account for a larger share of lending, making negotiations over debt restructuring more difficult.
Developing countries, including those in Africa, have increasingly called for reforms to the international debt framework, with demands also raised by African Union leaders and previous G20 presidencies.
