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Friday, Aug 08, 2025

Developing nations at risk of debt crises as external borrowing to top $62bn: World Bank

Developing nations at risk of debt crises as external borrowing to top $62bn: World Bank

Developing economies face rising debt-related risks as their debt-service payments are projected to top $62 billion in 2022, showed a recent World Bank report.   
This comes as the total external debt for low- and middle-income countries hit $9.2 trillion by the end of 2021, according to the World Bank’s International Debt Report.

The figure represents more than 100 percent of its value compared to a decade earlier.

The global financial body’s report noted that the poorest countries which are eligible to borrow from the World Bank’s International Development Association now spend over a 10th of their export revenues to service their long-term public and publicly guaranteed external debt.

Additionally, the total external debt of countries eligible to borrow from the IDA surged by an estimated 200 percent over the decade to reach $1 trillion.   

The World Bank warned that rising interest rates and slowing global growth risk tipping a large number of countries into debt crises. “About 60 percent of the poorest countries are already at high risk of debt distress or already in distress,” it added.

World Bank President David Malpass said the report showed a dramatic increase in the debt vulnerabilities facing low- and middle-income countries and called for urgent steps to help countries reach more sustainable debt levels.    

“We need a comprehensive approach to the debt problem, including debt reduction, swifter restructuring and improved transparency,” Malpass said in a statement in the International Debt Statistics 2022 report.   

“Sustainable debt levels are vital for economic recovery and poverty reduction,” he said.

The IDA countries’ total debt-service payments for long-term public debt service and government-guaranteed foreign debts amounted to about $46.2 billion by the end of 2021.

This figure is equivalent to 10.3 percent of their exports of goods and services and around 1.8 percent of their gross national income, compared to 3.2 percent and 0.7 percent, respectively, in 2010.

The report noted that the IDA countries’ debt service payments on their public and external debts guaranteed by the government are anticipated to climb 35 percent in 2022 to exceed $62 billion, representing one of the highest annual increases recorded over the past 20 years.

Last year, in October, the World Bank released a report indicating that the debt burden of the world’s low-income countries rose 12 percent to a record $860 billion in 2020 as countries responded to the COVID-19 crisis with massive fiscal, monetary and financial stimulus packages.
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