Global debt: developing nations owe a record $9.4tn, World Bank says

Developing countries owed a record $9.4 trillion to foreign lenders at the end of 2025, after their external debt grew 5.5% in a single year, the fastest pace since 2021, the World Bank said in its International Debt Report 2026. The search “global debt” has been climbing in the US since the report came out.

The short version, in the World Bank’s own words: these countries are “borrowing more, paying more, and in many cases leaving less for long-term development”, said Haishan Fu, the bank’s chief statistician.

The key numbers

• $9.4 trillion: total external debt of low- and middle-income countries, up 5.5% in 2025.
• $1.3 trillion: debt of the poorest (IDA-eligible) countries, up 8.1%, the fastest-growing group.
• $1.4 trillion: what developing countries paid in principal and interest in 2025, the fifth yearly rise in a row.
• 8.2%: average interest the poorest countries agreed to pay private lenders, the highest since 1989. On new bonds they paid 9.4%.
• $436 billion: how much more developing countries paid out in debt service than they received in new financing between 2022 and 2025.

Why is debt rising so fast?

Partly because borrowing became possible again. After a few years when bond markets were almost closed to poorer countries, governments rushed back: public bond sales rose nearly 35% to $251 billion, a five-year high, and more than 10 countries had already beaten their full-year 2025 borrowing by mid-August this year, the bank said.

Part of it is also an accounting effect. The US dollar weakened, so loans in euros, yen and yuan look bigger in dollars; more than a quarter of the $303 billion rise in government debt came from that, according to the report.

Is there any good news?

Some. Long-term debt flows turned from a $118 billion net outflow in 2024 to a $45 billion net inflow in 2025, meaning more money came in than went out. Middle-income countries also paid slightly less on new bonds, 5.5% on average against 5.8% a year earlier. The bank’s point is that access to money has improved, but its price has not.

Why it matters to Pakistan

The report’s country tables are where Pakistan’s figures sit, and the headline story is a familiar one at home: a large share of the federal budget goes on interest, leaving less for schools, hospitals and development. Pakistan is in the same position the World Bank describes, relying on rollovers from friendly countries, IMF tranches and occasional bond sales. When the poorest countries pay 8% to 9% on new market borrowing, every new Eurobond costs Islamabad far more than the multilateral loans it replaces.

“Managing debt responsibly means giving everyone, including future generations, a chance to thrive,” Fu said. The bank’s full country data is in the report on its Open Knowledge Repository.