The World Bank published the 2026 International Debt Report.
The report noted that the foreign debt of developing countries increased by 5.5 percent last year to 9.4 trillion dollars, and it was stated that this increase was the fastest increase since 2021 and was approximately 4 times the average increase in the 2022-2024 period.
The report pointed out that access conditions to international finance have improved, but financing costs have not decreased, and that the high debt burden, especially in the poorest countries, carries the risk of limiting basic investments in human resources.
The report stated that most of the increase in debt was triggered by the financing provided by private creditors, and noted that bond issuances of public institutions increased by approximately 35 percent to 251 billion dollars with the reopening of markets to many developing countries. It was emphasized that this was the highest level in the last five years.
The report underlined that the increase in external debt occurred fastest in the most fragile countries, and it was reported that the external debt of countries eligible to receive privileged financing from the World Bank's International Development Association (IDA) increased by 8.1 percent, reaching 1.3 trillion dollars.
Countries adjust payment schedule with higher interest rates
The report noted that many governments issue new bonds to buy back their maturing debts, and noted that these transactions soften the repayment profile without significantly reducing the debt stock, but often lead to higher interest rates.
The report stated that data at the beginning of 2026 showed that low- and middle-income countries' demand for international bond financing continued despite the high costs, and that by mid-August, more than 10 countries had exceeded the bond issuance amount in the whole of 2025, and some countries had returned to international markets.
The report stated that countries eligible for IDA paid an average of 8.2 percent interest to private creditors for their new commitments in 2025, and emphasized that this was the highest rate since 1989.
The report stated that the average interest rate paid by these countries on new bond issues was 9.4 percent.
On the other hand, the report noted that the average interest rate paid by the World Bank Group on new bond issues only for countries eligible to receive non-concessional loans from the International Bank for Reconstruction and Development (IBRD) decreased to 5.5 percent from 5.8 percent in the previous year.
Debt service payments reach $1.4 trillion
The report mentioned that the pressure on debt service continues in the high global interest rate environment and stated that the principal and interest payments of low- and middle-income countries increased for the fifth consecutive year and reached 1.4 trillion dollars with an increase of 1.9 percent in 2025. It was reported that payments to bondholders climbed to $363 billion, partly due to the effect of debt repurchases and early payments financed by new bond issues.
The report stated that developing countries paid 436 billion dollars more in debt service than the amount they received as new financing in the 2022-2025 period, and that long-term debt flows changed direction in 2025, while a net outflow of 118 billion dollars was experienced in 2024, while a net inflow of 45 billion dollars was recorded last year.
The report emphasized that movements in exchange rates were also effective in the increase in debt, and stated that more than a quarter of the 303 billion dollar increase in public debt and publicly guaranteed debt was due to the depreciation of the dollar, which increased the dollar equivalent of debts denominated in other currencies.
"Low and middle-income countries are borrowing more"
In his assessment of the issue, World Bank Group Chief Statistician and Development Data Director Haishan Fu pointed out that the resumption of private sector credit flows to low- and middle-income countries is positive, but these countries are more indebted and face higher costs.
Fu pointed out that this situation reduces the resources that can be allocated to long-term development investments in many countries, and stated that responsible management of debt is important for everyone, including future generations, to have the opportunity to live in prosperity.
