By Francis Ntow
Accra, Nov. 10, GNA – The external debt of Ghana and other developing countries has increased from 5.5 per cent to a record US$9.4 trillion in 2025, the World Bank Group’s International Debt Report 2026 has observed.
The report noted that the increase was the fastest pace since 2021 and about four times the 2022–24 average, adding that, while access to international finance had improved, the price of finance has not.
As such high debt burdens in the poorest countries threatened to crowd out essential investments in people, with private financing and currency movements driving much of the debt increase, the World Bank stated.
The report noted that borrowing from private creditors surged, with bond issuance from public entities rose nearly 35 per cent to $251 billion, the highest level in five years as markets reopened to many developing countries.
External debt grew fastest among the most vulnerable countries, increasing 8.1 per cent to US$1.3 trillion in countries eligible for concessional financing from the World Bank Group’s International Development Association (IDA).
Commenting on the development, Haishan Fu, WBG Chief Statistician and Director of Development Data, said, “the return of private lending to low- and middle-income countries is welcome, but these countries are borrowing more, paying more, and in many cases leaving less for long-term development.”
He encouraged efficient handling of such debt, saying, “managing debt responsibly means giving everyone – including future generations – a chance to thrive.”
The report showed that many governments issued new bonds to buy back maturing debt, smoothing repayment profiles without significantly reducing debt stocks, often at higher interest rates.
Early 2026 data showed continued demand for international bond financing from low- and middle-income countries despite high costs, with more than 10 countries exceeding their 2025 issuance, while others returned to markets by mid-August.
On payments, the report indicated that International Development Association (IDA)-eligible countries paid an average of 8.2 per cent on new private-creditor commitments in 2025 – the highest rate since 1989 – and 9.4 per cent on new bonds.
The gap between the rates IDA-eligible countries paid to official and private creditors widened from 3.4 percentage points in 2016 to 5.5 percentage points in 2025, the report stated.
In comparison, countries eligible for only non-concessional loans from the WBG’s International Bank for Reconstruction and Development (IBRD) paid an average of 5.5 per cent on new bonds, an improvement from the 5.8 per cent rate the previous year.
It stated that debt-service pressures remained severe amid elevated global interest rates. Low- and middle-income countries paid US$1.4 trillion in principal and interest in 2025, up 1.9 per cent and marking a fifth consecutive annual increase.
Payments to bondholders climbed to US$363 billion, partly reflecting debt buybacks and prepayments financed through new bond issues, the report further stated.
Between 2022 through 2025, developing countries paid US$436 billion more in debt service than they received in new financing. The direction shifted in 2025, however, as long-term debt flows turned from a US$118 billion net outflow in 2024 to a net inflow of US$45 billion.
On currency movements, the report indicated that more than a quarter of the US$303 billion increase in public and publicly guaranteed debt reflected the weaker US dollar, which raised the dollar value of debt denominated in other currencies.
For several of the largest concessional borrowers, these currency effects outweighed the principal they repaid in 2025, leaving reported debt higher despite continued servicing, the report said.
GNA
Edited by Linda Asante Agyei
Reporter: Francis Ntow
Email: [email protected]