Developing Countries’ Debt Reaches Record $9.4 Trillion in 2025, Says World Bank

The World Bank announced on Thursday that the external debt of developing countries hit a record $9.4 trillion in 2025. This increase is the fastest since the pandemic and is largely due to borrowing from private lenders and public enterprises issuing bonds.

The World Bank’s annual International Debt Report highlighted that the most vulnerable developing countries saw the largest growth in debt. While access to international finance has improved, the cost of borrowing remains high, putting pressure on the poorest nations.

Haishan Fu, a chief statistician at the World Bank Group, noted that while the return of private lending to low- and middle-income countries is positive, these nations are now borrowing more and paying higher interest rates. This situation often leaves less money available for long-term development.

Many governments have been issuing new bonds to pay off maturing debt, which can lead to higher interest rates. Private lenders typically charge more for loans compared to multilateral institutions like the World Bank or the International Monetary Fund.

The report revealed that the poorest countries are currently paying around 8.2 percent on new loans, the highest rate for this group since 1989. Debt-service pressures are intense, especially with global interest rates remaining high.

In 2025, low- and middle-income countries spent $1.4 trillion on loan repayments and interest, marking a 1.9 percent increase and the fifth consecutive year of rising payments. From 2022 to 2025, these countries paid $436 billion more in debt servicing than they received in new financing.

Fu warned that high debt levels limit developing countries’ ability to respond to economic shocks, which have been exacerbated by the pandemic, rising inflation due to conflicts, and changes in global trade policies.