Developing countries' external debt hits record 9.4 trillion dollars as high interest rates bite

In brief

• The World Bank reports that external debt of developing countries reached a record 9.4 trillion US dollars in 2025.
• Private lenders returned in large numbers and the poorest countries regained bond market access, but borrowing costs are at multi-decade highs.
• Rising bond yields add pressure on advanced economies and could affect millions of people in the poorest nations.

Record debt load

External debt owed by developing countries to foreign creditors reached a record 9.4 trillion US dollars in 2025, according to World Bank data (Auslandsverschuldung: Auslandsverschuldung ärmerer Länder erreicht neuen Höchststand – ZEIT ONLINE) (Weltbank: Auslandsschulden der Entwicklungsländer steigen auf Rekord – ZEIT ONLINE). That was an increase of 5.5 percent on the year before and the fastest growth since 2021 (Schulden der Entwicklungsländer steigen auf Rekordniveau – orf.at).

Private lenders return

Private creditors came back in large numbers, and the poorest countries regained access to bond markets, the World Bank said in its International Debt Report (Weltbank: Auslandsschulden der Entwicklungsländer steigen auf Rekord – suedkurier.de). Borrowing from private lenders rose sharply, while bonds issued by public entities grew by about a third to 251 billion dollars, the highest level in five years.

Costs at a multi-decade high

The cost of that credit is the problem. The bank warned that borrowing costs for these countries are now as high as at any point in decades. Capital market yields have risen worldwide in recent months, a development that coincides with inflation concerns tied to the Iran war, higher policy rates and growing government debt.

Pressure beyond poor countries

Bond yields are also at levels not seen in years in advanced economies, adding pressure on the United States, France and Germany and making new government borrowing more expensive globally. The World Bank has expressed concern that the debt burden could hit millions of people in the poorest nations.