World Bank: Developing countries pay $741bn more than they receive

Developing countries are closing 2025 under intense financial strain, having paid $741 billion more in external debt service between 2022 and 2024 than they received in new financing — a reversal that is deepening economic vulnerability and eroding fiscal space across emerging markets.

The scale of the shortfall is detailed in the World Bank’s latest International Debt Report, released in December, which warns that low- and middle-income economies are now facing their most severe financing pressures in decades as rising interest costs and shrinking access to credit tighten conditions.

The report highlights mounting fiscal distress, with interest payments alone soaring to $415 billion, diverting resources away from health, education, infrastructure, and other essential services.

External debt stocks reached a record $8.9 trillion, including $1.2 trillion owed by 78 low-income countries eligible for IDA support.

Although global interest rates peaked in 2024 and international bond markets temporarily reopened, the relief proved costly. Investors provided $80 billion in net new financing, but at average yields of around 10%, far above pre-2020 levels.

At the same time, countries undertook $90 billion in debt restructurings — the highest since 2010 — as they sought to avert default.

The human impact is worsening: in the 22 most heavily indebted countries, 56% of people cannot afford the minimum daily diet required for healthy living, underscoring the social toll of rising debt and tightening global financial conditions.