Developing countries have experienced significant financial pressure, spending a record $1.4 trillion on foreign debt in 2023, according to the World Bank's International Debt Report. Interest payments surged by nearly a third to $406 billion, impacting budgets for critical areas such as health and education.
The report highlights that the most vulnerable economies—those eligible for borrowing from the World Bank’s International Development Association (IDA)—faced intense financial strain. These countries paid $96.2 billion in debt servicing last year. Although principal repayments decreased by nearly 8% to $61.6 billion, interest costs rose to an all-time high of $34.6 billion, four times higher than a decade ago.
"Multilateral institutions have become the last lifeline for poor economies struggling to balance debt payments with spending on health, education, and other key development priorities," stated Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President.
The COVID-19 pandemic has exacerbated debt burdens across developing nations, compounded by rising global interest rates which reached over 4% from official creditors and more than 6% from private creditors—a 15-year high.
Since 2022, private creditors received almost $13 billion more in debt-service payments from IDA-eligible economies than they provided in new financing. In contrast, multilateral institutions injected nearly $51 billion more than they collected during this period.
At the end of 2023, low- and middle-income countries owed a record total external debt of $8.8 trillion—an increase of 8% since 2020. For IDA-eligible countries alone, external debt rose nearly 18% to reach $1.1 trillion.
The report also details improvements in data accuracy concerning these debts through matching reports from IDA economies with G7 and Paris Club creditors’ data, achieving a 98 percent match rate.
Haishan Fu, the World Bank Chief Statistician and Director of its Development Data Group commented on transparency advancements: "Comprehensive data on the liabilities of governments can facilitate new investment, reduce corruption, and prevent costly debt crises."
Nearly 70% of IDA-eligible economies published fully accessible public-debt data online in 2023—a notable increase since previous years—indicating progress toward better transparency.