World Bank Puts Developing Countries’ External Debt at a Record $9.4 Trillion

By The Edge Research Team

External debt of developing countries rose 5.5% to a record $9.4 trillion in 2025, the fastest pace since 2021, the World Bank’s International Debt Report 2026 showed.

For borrowers and their creditors, the year brought money back but not cheaper money. Private lenders and bond buyers returned, yet the poorest countries paid their highest average rate on new borrowing from private creditors since 1989, and debt service rose for a fifth straight year.

The report covers 119 low-income and middle-income countries, plus Guyana, that report to the Debtor Reporting System, with data to the end of 2025. The rise compares with an average annual increase of 0.5% over 2022 to 2024, the report says.

Private lenders return as public bond issuance reaches a five-year high

Private creditors drove much of the increase, the report says. Debt owed to them rose 5.2% to $5.03 trillion. Private creditors now account for 53.2% of the total stock.

Bond issuance by public entities rose nearly 35% to $251 billion, its highest level in five years, as markets reopened to many developing countries. Debt owed to official lenders also grew, by 8.4% to $1.99 trillion, led by multilateral institutions.

Net debt inflows more than doubled to $423.5 billion. Of the net long-term inflows from private creditors, bonds supplied $130.4 billion and commercial banks $120.7 billion.

Many governments sold new bonds to buy back maturing debt. That smoothed repayment schedules without significantly reducing debt stocks, often at higher interest rates.

Demand carried into 2026. By mid-August, more than 10 countries had already exceeded their full-year 2025 issuance, and several others had returned to international markets.

External debt of developing countries by creditor (in $ billions)

Year-end stocks for 119 low-income and middle-income countries and Guyana. Long-term debt splits into official and private creditors; multilateral includes IMF credit and SDR allocations; short-term covers maturities of one year or less and interest arrears on long-term debt.

In The Edge’s reading, the figures describe a market that reopened on harder terms: access returned in 2025 and early 2026 issuance suggests it lasted into this year, but at prices that leave less room for spending on development.

The poorest borrowers pay the highest private rates since 1989

Debt grew fastest in the countries eligible for concessional loans through the International Development Association, the poorest borrowers. It rose 8.1% to a record $1.3 trillion. That pace compares with an average of 2.9% over the previous three years.

Their net debt inflows rose 29.0% to $66.9 billion. The debt they owe to bondholders grew 15.7% to $116.9 billion.

Access came at a price. These countries paid an average 8.2% on new commitments from private creditors, 0.6 percentage point more than in 2024 and the highest since 1989. On new bonds they paid 9.4%, up 1.0 percentage point.

Official lenders charged them a steady 2.7%. The gap between private and official rates widened to 5.5 percentage points, from 3.4 points in 2016.

Countries eligible only for IBRD non-concessional financing fared better. Their average rate on new bonds fell to 5.5% from 5.8%.

For many frontier issuers, the report says, the problem is no longer getting into the market but affording it. The return of IDA-eligible borrowers to issuance at yields above 8% implies materially higher rollover costs, it adds.

Debt service rises for a fifth year as the weaker dollar lifts the stock

Developing countries paid $1.4 trillion in principal and interest in 2025, up 1.9%. Payments to bondholders climbed 13.7% to $363.1 billion.

That bondholder figure includes buybacks and prepayments financed with new bonds. It equals 28.8% of long-term debt service.

From 2022 through 2025, these countries paid $436 billion more in debt service than they received in new financing. In 2025 the direction turned, as net transfers on long-term debt swung to a $45.4 billion inflow from a $118.4 billion outflow in 2024.

The weaker dollar also lifted the reported stock. More than a quarter of the $303 billion rise in public and publicly guaranteed debt reflected the dollar’s fall, which raises the dollar value of debt owed in other currencies.

In the first half of 2025 the dollar recorded its biggest depreciation against other currencies in more than five decades, the report notes. For several of the largest concessional borrowers, the currency effect outweighed the principal they repaid.

China, which accounts for nearly a quarter of the total, cut its external debt 4.3% to $2.3 trillion. Excluding China, debt of middle-income countries rose 9.1% to $6.9 trillion, the fastest increase since 2017.

Egypt, Jordan and their region in the report’s country profiles

The report’s Middle East, North Africa, Afghanistan, and Pakistan region, 13 reporting countries, owed $598 billion at the end of 2025. That is 5.8% more than a year earlier and 80% more than in 2015.

The region recorded the largest one-year rise of any region in debt relative to gross national income, to 29.4% from 26.7%. Its debt service ratio improved 0.4 percentage point to 3.1% of income.

Public and publicly guaranteed debt made up $425 billion, or 71.1% of the regional total. Multilateral lenders were owed $186 billion of that and private creditors $126 billion.

Bilateral lenders accounted for $114 billion. The two bilateral creditors the report names for the region are China, at $30 billion, and Saudi Arabia, at $15 billion.

New official loans to the region carried an average 3.3% with 20-year maturities in 2025. Private creditors charged 6.9% over 5 years.

Egypt’s external debt rose 5.3% to $164.3 billion at the end of 2025. That is more than three times its 2015 level of $49.9 billion, and 27.5% of the regional total.

Public and publicly guaranteed debt was $127.0 billion. Private creditors accounted for $51.2 billion, or 40.3%, of that. Multilateral lenders were owed $41.9 billion, including $8.5 billion of IMF credit.

Bilateral creditors were owed $33.8 billion. The report names the Russian Federation, at $7.1 billion, and Saudi Arabia, at $6.4 billion.

Short-term debt was $34.4 billion, or 21.0% of the total. Egypt’s debt equals 47% of gross national income and 207% of exports. Debt service takes 30% of export earnings.

Egypt’s new official loans in 2025 carried an average 5.1% over 7 years. Private lenders charged 7.8% over 4 years.

The report lists Egypt among the next largest recipients of IMF disbursements in 2025 after Argentina and Pakistan. As set out on 4 November, Central Bank of Egypt data put total external debt at $166.7 billion at the end of June 2026, a later date and a different series.

Jordan’s external debt rose 7.0% to $50.5 billion, nearly double its 2015 level. It equals 83% of gross national income and 182% of exports.

Short-term debt made up $18.9 billion, or 37.5% of Jordan’s total. Debt service takes 23% of exports and 11% of income.

Jordan’s new official loans carried 4.0% over 22 years. Private creditors charged 5.7% over 4 years.

No Gulf Cooperation Council state reports to the Debtor Reporting System, so the report has no Gulf country profiles; Saudi Arabia appears in it as a creditor.

Debt indicators for the region, Egypt and Jordan, 2025

Region is the Middle East, North Africa, Afghanistan, and Pakistan (13 reporting countries). GNI is gross national income; service is principal plus interest; rates are average interest on new commitments in 2025. Ratios as printed in the country profiles, rounded to whole numbers.

Figures are from the World Bank’s International Debt Report 2026, its press release and its aggregate and country profiles, published on 5 November 2026; percentages, shares and multiples not attributed to the report are The Edge’s calculations.

Sources: World Bank, Central Bank of Egypt, The Edge.

Get Complimentary Insights

Follow us