Developing Economies Face Looming Debt Crisis, World Bank Warns
The World Bank has warned that surging interest rates are causing record levels of debt for the world's poorest countries, hindering investments in public health, education, and infrastructure. Low- and middle-income countries paid $443.5 billion towards principal and interest in 2022, the highest level in history, with projections of a 40% increase in 2023 and 2024. Over half of low-income countries are facing debt distress, prompting calls for debt restructuring to avoid a "lost decade." The variable interest rates and a stronger US dollar have made repayment more challenging, leading to an increase in government defaults. The mounting debt burdens have also made it difficult for developing countries to attract new investment and financing, with new loan commitments declining by 23% in 2021. Efforts for debt relief have been slow, with China criticized for being an obstacle to debt restructuring agreements.
- World Bank Warns Record Debt Burdens Haunt Developing Economies The New York Times
- Debt Crisis: Poorest Nations Owe Trillions in High Interest-Rate World Bloomberg
- Developing nations spent record $443.5 billion on public debt in 2022, World Bank says CNBC
- Poor countries' debt costs to hit 'crisis' levels, says World Bank Financial Times
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