Developing countries’ external debt climbed to a record $9.4 trillion in 2025, intensifying pressure on governments already balancing debt repayments against spending on healthcare, education, infrastructure and climate resilience. The World Bank reported the increase on November 5, 2026, describing the 5.5% rise as the fastest annual increase since 2021.
Quick facts
- $9.4 trillion: total external debt reported for low- and middle-income economies in the World Bank dataset for 2025.
- 5.5%: annual increase in that debt stock.
- $1.4 trillion: principal and interest payments made by these economies during 2025.
- $363 billion: payments to bondholders during the year.
- 8.1%: increase in external debt among countries eligible to borrow from the International Development Association (IDA), taking their total to $1.3 trillion.
What the latest figures show
The World Bank’s International Debt Report 2026 shows that the rise was not limited to one group of borrowers. External debt among IDA-eligible countries increased by 8.1% to $1.3 trillion. These are countries that qualify for the Bank’s concessional financing because of their lower income levels and limited creditworthiness.
Borrowing through international bond markets also remained important. Public entities in developing economies issued $251 billion in bonds, nearly 35% more than a year earlier and the highest level in five years, according to the report. The figures point to continued reliance on private capital markets even as borrowing costs remain high for many lower-income borrowers.
Debt in numbers: the key indicators
| Indicator | 2025 figure | What it means |
|---|---|---|
| External debt stock | $9.4 trillion | Record level in the World Bank dataset |
| Debt service paid | $1.4 trillion | Principal and interest paid during the year |
| Bondholder payments | $363 billion | Payments made to holders of debt securities |
Repayments are absorbing money that could support development
The headline debt stock is only part of the pressure. Low- and middle-income countries paid a combined $1.4 trillion in principal and interest in 2025, the fifth consecutive annual increase in debt-service payments. Bondholders received $363 billion of that total.
Across 2022 to 2025, these countries paid $436 billion more in debt service than they received in new financing, the World Bank said. In practical terms, more money flowed out to service existing obligations than came in through new long-term financing over that period. That can leave governments with less room to fund public services and investment, although the impact differs by country and budget position.
Why borrowing costs matter so much
The cost of taking on new debt varied sharply by borrower group and financing source. IDA-eligible countries paid an average of 8.2% on new commitments from private creditors and 9.4% on new bonds. Countries that borrow from the International Bank for Reconstruction and Development (IBRD) but are not IDA-eligible paid an average of 5.5% on new bonds.
Higher interest rates do not automatically mean a country is facing a debt crisis. But when a government must refinance maturing loans at higher rates, a larger share of future revenue can be committed to interest payments. That makes debt management, tax collection, export earnings and access to affordable long-term finance especially important.
Currency movements and refinancing add to the pressure
Exchange rates also affected the reported totals. The World Bank said more than one-quarter of the $303 billion increase in public and publicly guaranteed debt reflected the weaker US dollar, which raised the dollar value of debt denominated in other currencies. This is a valuation effect: it does not necessarily mean governments borrowed an equivalent amount of new money.
Some governments also issued new bonds to repay maturing obligations. Refinancing can spread repayments over time and reduce the risk of an immediate payment crunch, but it may not reduce the overall debt stock. If the replacement borrowing carries a higher interest rate, the longer-term cost can rise.
Why the figures matter for the wider global economy
Debt pressure can affect more than finance ministries. When debt payments take up a larger share of public revenue, governments may have less flexibility to maintain roads, power systems, schools, hospitals and other services. Lower public investment can also weigh on productivity and future growth. The scale of the effect depends on each country’s debt structure, growth prospects, currency exposure and ability to raise revenue.
Developments in trade and industrial activity are part of that wider picture. NewsVista Global has also reported on China’s October manufacturing activity, a useful indicator to watch because changes in major trading partners can influence export demand and foreign-currency earnings for developing economies.
Why two global debt estimates may not match
Readers may encounter a larger developing-country external-debt estimate in UN Trade and Development (UNCTAD) material. UNCTAD’s 2026 analysis cites a $12.3 trillion figure for 2025. That should not be treated as a direct contradiction of the World Bank’s $9.4 trillion figure: the organisations use different datasets and country coverage. The figures should therefore be attributed to their respective sources rather than combined or compared as if they measured an identical group of economies.
What to watch next
The next indicators to follow are the cost of new borrowing, the amount of debt falling due, export and tax revenues, exchange-rate movements and whether new financing is reaching productive investment. A record debt figure alone does not determine whether a country is in crisis. The more important question is whether governments can meet repayments without undermining essential services and long-term growth.
Frequently asked questions
How much external debt did developing countries have in 2025?
The World Bank reported a record $9.4 trillion in external debt for the low- and middle-income economies covered by its dataset in 2025.
How much did these countries pay in debt service?
They paid a combined $1.4 trillion in principal and interest during 2025, according to the World Bank.
Does the $9.4 trillion include all government and household debt?
No. It is an external-debt measure covering liabilities owed by residents to non-residents in the countries included in the World Bank dataset. It should not be described as all domestic and external debt or as every form of household borrowing.
Does a record debt total mean every developing country is in a debt crisis?
No. Debt risks vary considerably. A country’s ability to repay depends on factors such as the maturity of its loans, interest rates, export earnings, currency exposure, fiscal position and economic growth.
Sources
- World Bank: Developing countries’ external debt surges to a record $9.4 trillion (November 5, 2026)
- Reuters: Developing countries’ external debt hit record $9.4 trillion in 2025, World Bank says (November 5, 2026)
- UN Trade and Development: External Debt Sustainability and Development 2026
- World Bank: International Debt Statistics – Frequently Asked Questions
Editorial note: This report is based on the World Bank’s November 5, 2026 release and the cited institutional material. Figures refer to 2025 unless otherwise stated. The $9.4 trillion figure is specific to the World Bank’s low- and middle-income country dataset and is not a measure of every form of debt worldwide.
