Developing Countries Now Owe a Record $9.4 Trillion

4 min read

Developing countries’ external debt hit a record $9.4 trillion in 2025, the World Bank said on November 5, 2026. Interest costs on new loans stayed high.

Key Points

External debt in developing countries rose 5.5% to a record $9.4 trillion.
Low and middle income countries paid $1.4 trillion in principal and interest.
The poorest countries paid their highest private loan rates since 1989.

Developing Countries Debt Reaches a New High

The figures come from the World Bank’s yearly debt report. According to the World Bank, external debt in developing countries grew 5.5% in 2025.

External debt is money a country owes to lenders outside its borders. These lenders include other governments, banks and bondholders.

The Irish Times reported that the 2025 rise was the largest yearly increase since 2021. It also noted that interest rates on this debt reached their highest level since the 1980s.

$9.4TExternal debt of developing countries in 2025, a record, according to the World Bank.

Paying Back Costs More Every Year

Low and middle income countries paid $1.4 trillion in principal and interest in 2025. That was up 1.9% and marked the fifth yearly increase in a row.

Payments to bondholders reached $363 billion. Some countries used new bonds to buy back or pay off older debt early.

From 2022 to 2025, developing countries paid out $436 billion more than they received in new loans. The Irish Times reported this figure.

Good to know. When countries spend more on interest, they often have less money for services like health care and schools.

The Poorest Countries Feel It Most

The poorest countries can borrow from the World Bank’s International Development Association, which offers low-cost loans and grants. Their external debt grew 8.1% to $1.3 trillion in 2025.

These countries paid an average of 8.2% on new loans from private lenders. That was the highest rate since 1989. On new bonds, they paid 9.4%.

The gap between private and official loan rates also widened. It grew from 3.4 percentage points in 2016 to 5.5 points in 2025.

Measure	Before	After
Rate gap, private vs official loans (poorest countries)	3.4 points in 2016	5.5 points in 2025
Average new bond rate, middle income countries	5.8% in 2024	5.5% in 2025
External debt, poorest countries	About $1.2 trillion in 2024	$1.3 trillion in 2025

The 2024 debt figure for the poorest countries is an estimate based on the reported 8.1% growth.

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Better Access, Higher Price

Some news was positive. Bond sales by public bodies in developing countries rose nearly 35% to $251 billion. That was the highest level in five years.

Middle income countries also paid a little less on new bonds. Their average rate fell to 5.5% from 5.8% the year before.

Still, the World Bank summed up the problem simply. “Access to international finance has improved, but the price of that finance has not,” it said.

Why This Matters

High debt costs can squeeze spending on schools, hospitals and roads. When a country spends more on interest, it has less left for its people.

Haishan Fu, the World Bank Group’s chief statistician, said managing debt responsibly gives future generations a chance to thrive.

The same idea applies at home. Paying down costly debt first frees up money for other goals. Our guide on how to pay off holiday credit card debt shares simple steps.

This article is for information only and is not financial advice.

Try this today. List your debts by interest rate. Pick the one with the highest rate to pay down first.

Frequently Asked Questions

What is external debt?

External debt is money a country owes to lenders in other countries. It includes loans from governments, banks and bond investors.

Why are poor countries paying such high interest?

Private lenders charge more when they see higher risk. The World Bank found the poorest countries paid 8.2% on new private loans in 2025.

Where can I read the full report?

The World Bank publishes its debt figures and press releases on its website. For your own plans, see our guide to financial goals for 2027.

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Editor’s Note

This story is accurate as of November 6, 2026. Figures cover 2025 and come from the World Bank’s November 5 release. Future revisions may change some numbers.

Spot an error in this article? Please contact us at support@digieh.com or read our Corrections Policy.

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