By Radarr Africa Business Desk
LAGOS, November 9 (Radarr Africa) – The external debt of low- and middle-income countries rose 5.5 per cent to a record $9.4 trillion in 2025, the largest annual increase since 2021, the World Bank said in its annual International Debt Report, Reuters reported on November 5.
The poorest developing countries paid an average of 8.2 per cent on new commitments from private creditors, the highest rate since 1989, and 9.4 per cent on new bonds. Countries not eligible for the International Development Association’s low- and zero-interest loans paid an average of 5.5 per cent on new bonds, down from 5.8 per cent in 2024.
Borrowing from private creditors and public bond issuance rose nearly 35 per cent to $251 billion, the highest level in five years. External debt among countries eligible for IDA support rose 8.1 per cent to $1.3 trillion.
Debt service totalled $1.4 trillion in principal and interest, the fifth straight annual increase. Payments to private creditors rose 13.7 per cent to $363 billion.
From 2022 to 2025, developing countries paid $436 billion more in debt service than they received in new financing, although 2025 showed a net inflow of $45 billion. A weaker dollar accounted for more than 28 per cent of the rise in developing countries’ debt, because it raises the dollar value of debt owed in other currencies. By mid-August, more than 10 countries had exceeded their full-year 2025 issuance.
The Bank warned that higher debt service could weaken investment and increase vulnerability to shocks. It called for greater transparency, stronger standards and closing data gaps, since new creditors, instruments and guarantees make full debt exposure harder to assess.
Haishan Fu, the World Bank’s chief statistician, said: “Managing debt responsibly means giving everyone, including future generations, a chance to thrive.”
The report matters for African borrowers, many of which depend on international bond markets and private lenders and are eligible for IDA support. Higher interest rates on new private commitments raise the cost of refinancing at a time when governments are also managing currency swings and commodity price volatility.
