External debt in developing countries rose by 5.5 per cent to a record $9.4 trillion in 2025, marking the fastest increase since 2021, according to the World Bank Group’s International Debt Report 2026.
The report attributed much of the increase to private borrowing and rising bond issuance, which climbed nearly 35 per cent to $251 billion. Countries eligible for concessional financing from the International Development Association (IDA) recorded an 8.1 per cent increase in external debt to $1.3 trillion.
World Bank Group Chief Statistician and Director of Development Data, Haishan Fu, said developing countries were borrowing more and paying higher interest rates, leaving fewer resources for long-term development. IDA-eligible countries paid an average of 8.2 per cent on new private loans and 9.4 per cent on new bonds in 2025.
The report also revealed that low- and middle-income countries paid $1.4 trillion in principal and interest during the year, representing a 1.9 per cent increase and the fifth consecutive annual rise in debt-service payments.
