Developing-Country Debt Hits Record $9.4tn

The World Bank said debt owed by developing countries rose to a record $9.4tn last year.

By Career Ahead AI · Global — AI-assisted, fact-verified against cited sources. Readers should verify key facts.

The poorest economies face a heavy debt burden

The increase was 5.5%. The world’s twenty-six poorest economies are facing their most significant debt burden since 2006, according to the World Bank. They are home to around 40 percent of the world’s population, and government debt in the group averages 72 percent of GDP. The figures measure the debt burden across economies that together account for a large share of the global population.^¹²

International aid to the poorest economies has shrunk to a two-decade low as a share of their economic output. Low-income economies borrowed heavily during the Covid-19 pandemic, causing primary deficits to triple, and many have not fully unwound them. Nearly half of the twenty-six poorest economies are now in debt distress. Ayhan Kose, the World Bank’s deputy chief economist, said low-income economies can and must do much for themselves, but also need stronger help from abroad.^¹²

The poorest borrowers face high interest rates

The poorest countries eligible for concessional lending from the World Bank faced an average interest rate of 8.2% on new borrowing. That was the highest rate since the late 1980s. The rate shows the cost these borrowers face when they seek new finance, even as the World Bank’s chief statistician, Haishan Fu, said access to international finance had improved.^¹²

Ayhan Kose, the World Bank’s deputy chief economist, said low-income economies can and must do much for themselves, but also need stronger help from abroad.¹²

You may also like

Government & Policy

Britain Sells Five-Year Debt at a 5.036% Yield

Gilt yields have risen across advanced economies, while dealers put the rise in Britain’s gross financing requirement for 2027/28 at £27 billion.

Read More →

Preliminary data for 2026 suggested that lending continued at a rapid pace, but at high interest rates as global financing costs rose. The World Bank highlighted recent borrowing by Laos at 11.5% and by the Republic of Congo at 13.88%. Those examples show the rates attached to borrowing by individual countries, alongside the average for the poorest countries eligible for the Bank’s concessional lending.^¹²

Debt servicing limits investment and food access

The World Bank said the rising cost of servicing external debt was preventing some governments from investing for the future. Fu said: “Access to international finance has improved, but the price of that finance has not.” The distinction is between whether governments can obtain international funding and what they must pay for it. The Bank also found that global shocks had more impact on the availability of food in heavily indebted countries.^¹

The figures sit alongside pressure on governments to meet debt payments while dealing with other demands. The World Bank’s findings link debt servicing costs to reduced room for future investment, while its food finding connects heavy indebtedness with the effects of global shocks on food availability. The measures describe separate pressures: the cost of external borrowing for public finances, and the greater effect of shocks on access to food in heavily indebted countries.^¹

The UK is preparing a debt initiative through the G20

The UK government is preparing to champion a “new drive on debt” as part of its presidency of the G20 next year. Prime minister Andy Burnham has linked the initiative to confronting the legacy of slavery. Burnham appointed Gordon Brown, a former Labour prime minister, to examine whether changes to the global debt regime are feasible. The appointments and plans place debt reform on the UK’s agenda for its G20 presidency.^¹

Last month, UK foreign secretary Ed Miliband set out plans for a “new deal” for heavily indebted countries in a speech at the IMF annual meetings in Bangkok. One proposal for the deal is to mobilise the balance sheets of the World Bank and other multilateral development banks to buy back outstanding debt. The approach would involve institutions using their financial capacity to purchase debt that countries still owe.^¹

You may also like

Featured

Europe’s Rulebook for Algorithmic Managers Arrives by December 2026

The EU Platform Work Directive forces platform companies to disclose automated task allocation, performance evaluation and monitoring, and to provide human review of decisions. Member…

Read More →

The debt landscape is more complex than before the Gleneagles summit in 2005, when G8 countries signed up to write off billions of pounds worth of debt. Today, creditors tend to be private-sector bondholders rather than governments. African Union heads of state have joined growing calls in recent years for changes to the international debt framework, as have the G20 chairs of Brazil and South Africa.^¹

The World Bank’s findings link debt servicing costs to reduced room for future investment, while its food finding connects heavy indebtedness with the effects of global shocks on food availability.

Debt Costs Reshape Global Pay and Risk

For readers weighing roles in finance, development, or government, the record $9.4tn debt and the 8.2% average rate for the poorest borrowers signal a shift: capital is more expensive for emerging markets, so employers in those regions may tighten budgets for hiring or raises. If you work for a multilateral lender or a bank, expect more demand for debt-restructuring expertise, as nearly half of the 26 poorest economies face distress and creditors are now private bondholders, not governments.^¹²

For career planning, the UK's G20 debt drive and proposals to mobilise World Bank balance sheets to buy back debt could create roles in policy, legal, and advisory work tied to sovereign finance. Meanwhile, the finding that global shocks hit food availability harder in indebted countries means supply-chain and commodity analysts should factor sovereign risk into their models. If you are in public finance, ask how your employer's exposure to high-rate borrowing like Laos's 11.5% or Congo's 13.88% affects your compensation or job security.^¹