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2026-11-05 22:50:27
[World Bank: Record External Debt in Emerging Economies Exacerbates Debt Service Pressures] World Bank data shows that external debt in emerging economies will climb to a record $9.4 trillion in 2025, partly due to borrowing costs in the poorest countries reaching levels not seen in decades. The World Bank stated that last year, low-income countries eligible for its grants and concessional financing faced an average interest rate of 8.2% on newly obtained private loans and 9.4% on newly issued bonds. In contrast, the average interest rate on newly issued bonds in stronger developing countries was 5.5%. The bank noted that for many frontier market issuers, the main challenge today is not access to financing, but affordability of financing costs. The World Bank stated that private financing will drive most of the growth in external debt in low- and middle-income countries (excluding China) in 2025, with net debt inflows reaching nearly $360 billion. The World Bank added that many governments are issuing new bonds to repurchase existing debt or smooth debt maturities, but this has not significantly reduced the debt stock. The report points out that when governments already face huge financing needs and limited policy space, external shocks may be more difficult to withstand.
