Developing countries spend record amount on foreign debt – World Bank

Developing countries spent a record $1.4tn (€1.3tn) to meet their foreign debt obligations in 2023, according to a new report from the World Bank. International Development Association (IDA) countries, which receive help from the World Bank’s International Development Association, paid $96.2bn (€91.9bn) to service their debt in 2023.

Within this, interest costs amounted to an all-time high of $34.6bn (€33.05bn). On average, interest payments of IDA countries now amount to nearly 6% of the export earnings of IDA-eligible countries – a level that hasn’t been seen since 1999.

This came after many economies were compelled to take on more foreign debt linked to the pandemic, said Tuesday’s publication. Last year, borrowing became more expensive as interest costs climbed to a 20-year high, a response to heightened inflation. Depreciating local currencies and uncertainty over global growth also added to debt burdens – which were most acute in the poorest nations. “Multilateral institutions have become the last lifeline for poor economies struggling to balance debt payments with spending on health, education, and other key development priorities,” said Indermit Gill, the World Bank Group’s chief economist and senior vice- president. (PICTURED)

The World Bank noted that, during the period of financial instability last year, private creditors were extracting more money in debt payments from poorer regions than they were putting in through loans. (www.Euro News)

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