Developing countries’ external debt hit record $9.4trn in 2025, says World Bank
World Bank has revealed that external debt owed by developing countries increased by 5.5per cent to $9.4 trillion in 2025, amid increased borrowing from private creditors and renewed access to international bond markets pushed up debt levels.
The Bank disclosed this in its International Debt Report 2026, released on Thursday, November 5, warning that higher borrowing costs and mounting debt-service obligations could leave governments with fewer resources for essential development investments.
According to the Bank, the increase was the fastest since 2021 and approximately four times the average growth recorded between 2022 and 2024, highlighting the growing financing pressures facing developing economies despite improved access to international capital.
Debt grew even faster among the most vulnerable economies, with external debt in countries eligible for concessional financing from the World Bank’s International Development Association (IDA) rising 8.1% to $1.3 trillion.
Private creditors accounted for much of the increase in developing countries’ external debt as international financial markets reopened to several emerging and developing economies.
“The return of private lending to low- and middle-income countries is welcome, but these countries are borrowing more, paying more, and in many cases leaving less for long-term development,” said Haishan Fu, World Bank Group Chief Statistician and Director of Development Data.
Bond issuance by public entities rose nearly 35% to $251 billion in 2025, its highest level in five years.
However, the World Bank noted that some governments used proceeds from new bond issuances to buy back maturing debt, helping to spread repayment obligations over longer periods without substantially reducing overall debt stocks.
These refinancing transactions often came at higher interest rates, increasing the cost of servicing the debt.
Early 2026 data also indicate that demand for international bond financing has remained strong despite elevated borrowing costs. By mid-August, more than 10 developing countries had already exceeded their full-year 2025 bond issuance, while several others returned to international markets.
