Developing countries paid an unprecedented $1.4 trillion to service their foreign debts in 2023, with interest costs soaring to their highest levels in 20 years, the World Bank revealed in its latest international debt report on Tuesday.
The poorest countries bore the brunt of the burden, shelling out over $96 billion, including nearly $35 billion in interest payments alone. These mounting costs have forced many nations to increasingly rely on multilateral lenders like the World Bank to stay afloat.
The World Bank cited high global interest rates as the main factor behind surging debt costs. Rates on loans from official creditors have doubled to over 4%, while those from private creditors rose to 6%—their highest in 15 years.
Although rates have begun to ease in advanced economies, including the United States, they remain above pre-pandemic averages, further straining developing countries.
With borrowing costs expected to remain elevated, developing nations face increasing challenges in maintaining economic stability while addressing critical issues such as poverty reduction and infrastructure development.
