Developing Country Debt Hits Record $9.4 Trillion
Borrowing by developing nations rose 5.5% last year, driven by private sector lending and higher interest rates on new loans.
Updated on Nov. 5, 2026 in Debt Relief
Developing country debt rose to a record $9.4 trillion (£7 trillion) last year, an increase of 5.5% and the fastest growth in four years. The rise was driven by a rapid expansion of private sector lending.
Why it matters
The poorest countries now face an average interest rate of 8.2% on new borrowing, the highest since the late 1980s. Rising debt-servicing costs are preventing some governments from investing in future development.
Developing country debt reached $9.4 trillion last year, up 5.5%, with the poorest countries facing an average 8.2% rate on new loans. Preliminary data suggests lending continued at a rapid pace in 2026, though the full trajectory remains unconfirmed.
The players
World Bank
The World Bank is an international financial institution that provides loans and technical assistance to developing countries and publishes the debt data cited here.
Gordon Brown
Gordon Brown is a former UK prime minister who has been appointed to examine changes to the global debt regime.
The details
The World Bank reported the increase was fueled by a rapid rise in private sector lending. Individual borrowing rates varied widely, with Laos at 11.5%, the Republic of Congo at 13.88%, and Kenya at 9.2%.
Timeline
Last year (2025): developing country debt rose to a record $9.4 trillion.
October 2026: the UK foreign secretary set out new deal plans at IMF meetings in Bangkok.
2026: preliminary data shows lending continued at a rapid pace.
2027: the UK is expected to champion a new drive on debt during its G20 presidency.
Market Dynamics
The World Bank's debt reporting shows developing-country borrowing growing faster than at any point in four years, with the poorest countries facing their highest new-loan rates since the late 1980s. Rising global financing costs have kept rates elevated into 2026.
Higher interest rates on sovereign and private lending to developing countries signal tighter credit conditions for emerging-market borrowers. Investors with exposure to developing-economy debt may face shifting risk premiums as multilateral debt-buyback proposals take shape.
The takeaway
Borrowing costs for the world's poorest countries are now at their highest level since the late 1980s, which narrows the room for investment in long-term growth. Tracking the UK's G20 debt initiative will show whether multilateral institutions can reduce that burden.
What happens next
The UK government will take up a new drive on debt during its G20 presidency next year, and the foreign secretary's proposed deal is expected to include mobilizing multilateral development bank balance sheets to buy back outstanding debt.
Further reading
For background on the mechanisms behind these borrowing pressures, see Debt Relief.
