A world
of debt
Report 2026
Rising debt costs and stalling development
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Why it matters?
Public debt is used by governments to finance expenditures, protect and invest in their people and pave the way to better futures. However, when the costs of servicing debt grow excessively, they displace other spending, cause development to stall, and put people’s futures at risk. This is the reality facing a growing number of developing countries today.
Global public debt continued to rise in 2025, with over two thirds held by developed countries that collectively account for less than a fifth of the world’s population. However, debt has been growing faster in the developing world.
In recent years the stock of public debt has grown in line with economies, leading to stabilizing debt-to-GDP ratios in most countries.
Available external debt finance has shrunk as bilateral lenders diverted development assistance to deal with issues closer to home and private creditors became more risk averse.
This, coupled with sharply higher borrowing costs and deepening domestic capital markets, has caused developing countries to source relatively less of their public debt from external sources.
Interest rates on public debt in developing countries are already structurally higher than those in developed countries and have been elevated further by policy and market responses to recent global conflicts and crises.
As a result, public borrowing costs have risen rapidly, with the interest bill reaching close to $1 trillion in 2025.
Interest payments on public debt are outpacing critical development spending.
In Africa and Latin America and the Caribbean, governments spend more per person on interest than on either health or education.
This perpetuates the already large gap between developed and developing countries and puts the futures of a growing share of the developing world’s population at risk.
Rising interest burdens affect an increasing number of developing countries and their populations.
Whereas 24% of Africa’s population lived in countries spending more on interest than on health or education in 2010, by 2023 this had risen to 65%. In Latin America and the Caribbean, it rose from 34% to 58% over the same period. Over half the population of Developing Asia and Oceania is similarly affected.
If developing countries could borrow at the same rates as developed countries, they could collectively save around $500 billion each year in interest costs.
What is needed to get back on track?
Start with
- Strengthening global and regional financial safety nets.
Then address structurally higher borrowing costs
Through multilateral action by
- Reversing declines in official development assistance
- Expanding multilateral and regional development bank lending
- Scaling up technical assistance to build key capacities
- Advancing the Borrowers’ Platform and the Working Group on guiding principles on responsible sovereign lending and borrowing
And nationally by
- Strengthening macroeconomic management and public institutions
- Improving the structure of debt portfolios
- Scaling up the use of innovative financial instruments
Key statistics
$ 35 trillion
Developing countries’ public debt in 2025
$ 995 billion
Developing countries’ net interest payments on public debt in 2025
8.1%
Median share of government revenue that developing countries spent on net interest in 2025, nearly double the 2010 level
$ 500 billion
Annual interest savings if developing countries paid what developed countries do to service their public debt
51 developing countries
Spend more on interest payments than on either education or health
3.7 billion people
Live in countries that spend more on interest payments than on either education or health, 1.2 billion more than in 2010