ASIATODAY.ID, WASHINGTON — Developing countries are facing the largest net debt outflow in at least 50 years, according to the World Bank’s latest International Debt Report.
Between 2022 and 2024, these economies paid US$741 billion more in principal and interest than they received in new financing, marking an unprecedented reversal of capital flows.
Despite temporary relief in 2024 — as global interest rates peaked and bond markets reopened — the crisis remains acute. Developing nations restructured US$90 billion in external debt last year, the highest since 2010, and bond investors injected US$80 billion in fresh funds. But the money came at a steep cost: borrowing rates hovered around 10%, double the levels seen before 2020.
“Financial conditions may look better, but developing countries should not fool themselves,” warned Indermit Gill, World Bank Chief Economist and Senior Vice President for Development Economics on December 3, 2025.
“They are not out of danger. Debt is still building up — often in new and more harmful ways. Governments must use today’s breathing room to fix their fiscal positions instead of rushing back to external markets.”
Global Debt Hits Record High: US$8.9 Trillion
The report shows that total external debt owed by low- and middle-income countries climbed to a record US$8.9 trillion in 2024. Of that, US$1.2 trillion is owed by the 78 low-income countries eligible for the World Bank’s International Development Association (IDA).
Interest burdens are surging:
Official creditor rates reached a 24-year high
Private creditor rates reached a 17-year high
Interest payments alone hit an all-time record of US$415 billion
These resources — enough to finance primary healthcare, basic education, and crucial infrastructure — were instead consumed by debt service.
In the most heavily indebted countries, one in two people cannot afford the minimum daily diet required for long-term health.
World Bank Emerges as the Largest Net Financier; Bilateral Lenders Retreat
As access to affordable credit collapses, the World Bank stands out as the biggest lifeline for vulnerable economies:
Net new financing to IDA countries in 2024: +US$18.3 billion
Grants provided: US$7.5 billion — a historic high
In contrast, official bilateral creditors — mainly governments and government-linked institutions — pulled back sharply after participating in large-scale restructurings that cut some nations’ long-term debt by up to 70%.
In 2024, they collected US$8.8 billion more in principal and interest than they disbursed.
With cheap funding drying up, many developing countries turned inward. Among 86 countries with available data, more than half saw domestic public debt grow faster than external debt.
“Relying more on domestic markets reflects progress,” said Haishan Fu, Director of the World Bank’s Development Data Group.
“But excessive domestic borrowing can crowd out private-sector lending, and shorter maturities raise refinancing risks. Governments must tread carefully.”
Human Costs Explode: Hunger Spreads Across Debt-Strapped Nations
The report delivers one of its most alarming findings:
In the 22 countries with the highest debt burdens — where external debt exceeds 200% of export revenues — an average of 56% of the population cannot afford a minimum nutritional diet.
Eighteen of these countries are IDA-eligible, where nearly two-thirds of citizens live with chronic food insecurity.
The data underscores a stark truth: the global debt crisis is no longer just a macroeconomic challenge — it is becoming a humanitarian emergency. (AT Network)
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