Developing-country debt rose to a record $9.4tn in 2025, and the World Bank said the pace of increase was the fastest in four years. For the poorest countries eligible for concessional lending, the average interest rate on new borrowing climbed to 8.2%, the highest since the late 1980s.
The new figures help explain why Global Debt is back at the top of the agenda. Haishan Fu said low- and middle-income countries are borrowing more, paying more, and leaving less for long-term development, a warning that lands as governments face rising debt-service bills and less room to invest for the future.
The World Bank said the debt pile was not just bigger, but also more expensive. External debt-service costs are now limiting some governments' ability to spend on development, even though access to international finance has improved. That gap between easier access and dearer money is the heart of the problem, and it is hitting the poorest borrowers hardest.
The scale of the strain shows up in the rates the World Bank highlighted. Laos was borrowing at 11.5%, the Republic of Congo at 13.88%, and Kenya at 9.2%, all well above the 8.2% average for the poorest countries. Preliminary 2026 data suggested lending continued at a rapid pace, with global financing costs still high.
The report also pointed to wider damage beyond budgets. It found global shocks had a bigger effect on food availability in heavily indebted countries, and said debt burdens may be closely associated with a fall in the affordability of a healthy diet during periods of global stress. In other words, the cost of debt is no longer only a fiscal problem; it is shaping what people can afford to eat.
That is why the political response is gathering pace. Andy Burnham is preparing to champion a new drive on debt as part of the UK government's presidency of the G20 next year, while Gordon Brown has been asked to examine possible changes to the global debt regime. Ed Miliband has already set out plans for a new deal for heavily indebted countries, with proposals likely to include using the balance sheets of the World Bank and other multilateral development banks to buy back outstanding debt, extend repayment periods and bring down interest rates.
The friction is that today’s creditors are increasingly private-sector bondholders, not governments, which makes the old playbook less useful. Demands for reform have grown in recent years, including from African Union heads of state and under the G20 chairs of Brazil and South Africa, and the next test is whether the UK can turn a debt warning into a workable deal.
