The cost of servicing government debt in developing countries reached a record $443.5 billion

Today, December 13, World Bank published its annual report on global debt. According to his calculations, developing countries spent a record $443.5 billion on servicing public debt in 2022, 5% more than a year earlier. The cost of servicing government debt for the 24 poorest countries will rise by 39% in 2023 and 2024. The report also said that over the past three years, 18 countries have declared sovereign default – among them Sri Lanka, Ghana and Zambia. This is more than in the previous two decades.

“Record levels of debt and high interest rates are driving many countries toward crisis,” said Indermeet Gill, senior economist and vice president of developing economies at the World Bank Group. “Every quarter in which interest rates remain high leads to “As more and more developing countries find themselves in dire straits and faced with difficult choices: service their national debt or invest in health, education and infrastructure.”

The World Bank also reports that private lenders received $185 billion more in loan payments in developing countries in 2022 than they issued loans during that period. According to Mr. Gill, this reflects, among other things, the fact that international banks have become less willing to lend to developing countries as interest rates rise in developed countries, making it more profitable to issue loans there than before. In this regard, it is now more difficult for developing countries to obtain new borrowings – their volume in 2022 decreased by 23%, to $371 billion.

Yana Rozhdestvenskaya