Reported by The Guardian
Cost of servicing external debt is preventing developing countries from investing for future
Debt owed by developing countries rose to a record $9.4tn (£7tn) last year, with the poorest paying the highest interest rates since the late 1980s, World Bank data shows.
The UK government is preparing to champion a “new drive on debt” as part of its presidency of the G20 next year – a move the prime minister, Andy Burnham, has linked to confronting the legacy of slavery.
More from the original report
In its annual International Debt Report, the World Bank said the rising cost of servicing external debt was preventing some governments from investing for the future.
The increase in developing country debt last year, of 5.5%, was the fastest in four years, the report finds – driven by a rapid rise in private sector lending.
The World Bank’s chief statistician, Haishan Fu, said: “Access to international finance has improved, but the price of that finance has not. Low- and middle-income countries are borrowing more, paying more, and, in many cases, leaving less for long-term development.”
On average, the report found the poorest countries – those eligible for concessional lending from the World Bank – faced an average interest rate of 8.2% on new borrowing: the highest since the late 1980s. It also said preliminary data for 2026 suggested lending continued at a rapid pace – but at continued high interest rates as global financing costs rose.
The Bank highlighted recent borrowing by Laos, at an interest rate of 11.5%, the Republic of Congo, at 13.88%, and Kenya, at 9.2%.
Analysing the connection between a high debt burden and the ability to spend on domestic priorities, the World Bank found global shocks had more impact on the availability of food in heavily indebted countries.
“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,” the report said.
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