World Bank data show global debt in developing countries rose to a record $9.4tn last year, with the increase running at 5.5% and the pace the fastest in four years. Haishan Fu said access to international finance has improved, but the price of that finance has not.
“Access to international finance has improved, but the price of that finance has not. Low- and middle-income countries are borrowing more, paying more, and, in many cases, leaving less for long-term development.” That warning sits at the centre of the World Bank’s annual International Debt Report, which says rising debt-service costs are preventing some governments from investing for the future.
World Bank debt warning
The poorest countries eligible for concessional lending from the World Bank faced an average interest rate of 8.2% on new borrowing, the highest since the late 1980s. The World Bank highlighted recent borrowing by Laos at 11.5%, the Republic of Congo at 13.88% and Kenya at 9.2%, showing how expensive financing has become even for borrowers at the lower end of the income scale.
Preliminary data for 2026 suggest lending continued at a rapid pace and borrowing stayed at high interest rates as global financing costs rose. Today’s creditors tend to be private-sector bondholders, not governments, which makes the debt framework less familiar than the one that shaped earlier debt relief campaigns.
UK and G20 debt plan
Andy Burnham is preparing to champion a new drive on debt as part of the UK presidency of the G20 next year, and he has linked it to confronting the legacy of slavery. Burnham has appointed Gordon Brown to examine the feasibility of changes to the global debt regime in the run-up to the UK’s G20 presidency next year.
Ed Miliband set out plans last month for a new deal for heavily indebted countries in a speech at the IMF annual meetings in Bangkok. The proposed approach is likely to include proposals to mobilise the balance sheets of the World Bank and other multilateral development banks to buy back outstanding debt, with the aim of extending repayment periods and bringing down interest rates.
Food security and debt costs
The World Bank said global shocks had more impact on the availability of food in heavily indebted countries. “Food and nutrition security provides a concrete example of these interactions, illustrating how debt burdens may be closely associated with a decline in the affordability of a healthy diet during periods of global stress.” For governments already carrying heavier debt-service bills, the practical effect is less room for long-term development spending and tighter pressure on food and nutrition budgets.
The push for changes to international debt rules has grown in recent years, with African Union heads of state and the G20 chairs of Brazil and South Africa calling for reform. The next step is the work Burnham has assigned to Brown before the UK takes over the G20 presidency next year, leaving one immediate question: what specific debt reforms will the UK put on the table for heavily indebted countries?
