WBG data show emerging-market external debt climbed to a record $9.4 trillion in
2025, driven in part by borrowing costs for the poorest countries reaching
multi-decade highs. Low-income countries eligible for WBG grants and
concessional finance faced average rates of 8.2% on new private loans and 9.4%
on new bond issuance, versus 5.5% for stronger developing-country bond issues.
WBG warns many frontier-market issuers now confront affordability rather than
access constraints. Private financing accounted for most of the external-debt
increase in low- and lower-middle-income countries (ex-China) in 2025, with net
debt inflows near $360 billion. Many governments issued new bonds to buy back
maturing debt or smooth maturities without materially reducing debt stocks,
leaving countries with large financing needs and limited policy space more
vulnerable to external shocks.
