More developing economies are increasingly relying on off-budget and complex borrowing arrangements due to a tighter financing environment, according to a new World Bank report on debt transparency. This trend is complicating the assessment of public debt exposures.
The report, titled "Radical Debt Transparency," suggests a fundamental change in how debtor and creditor countries report and disclose debt. It calls for broader coverage and deeper, loan-by-loan disclosures. While more low-income countries have started publishing some debt data—rising from below 60% to over 75% since 2020—only 25% disclose detailed information on newly contracted debt. The increase in complex financing arrangements such as private placements, central bank swaps, and collateralized transactions has further complicated reporting.
World Bank's Senior Managing Director Axel van Trotsenburg stated, “Recent cases of unreported debt have highlighted the vicious cycle that a lack of transparency can set off. When hidden debt surfaces, financing dries up and terms worsen. Countries turn to opaque, collateralized deals. Radical debt transparency, which makes timely and reliable information accessible, is fundamental to break the cycle.”
The report notes that domestic debt issuance is also rising but disclosure standards remain inadequate. Additionally, countries are engaging in “silent” partial and confidential debt restructurings with select creditors, depriving markets of essential information.
To improve transparency practices urgently, the report recommends legal and regulatory reforms mandating transparency in loan contracts and lending terms disclosure. It also suggests full participation by creditor countries in comprehensive debt reconciliation processes, regular audits with better national oversight, and public release of restructuring terms once agreements are finalized.
Pablo Saavedra, World Bank’s Vice President for Prosperity remarked, “Debt transparency is not just a technical issue—it’s a strategic public policy that builds trust, reduces borrowing costs, and attracts investment.” He added that radical debt transparency supports sustainability while unlocking private sector investment to drive job creation.
The World Bank promotes these efforts through its technical assistance program focusing on country-specific reforms and the global Debtor Reporting System—the primary source of verifiable data on external debts of low- and middle-income countries. Efforts are underway to expand this system to include domestic debts and enhance data quality further.