20 July 2023
Public debt around the world has been on the rise over the last decades. According to UNCTAD, global public debt has increased more than 5-fold since the year 2000, outpacing global GDP, which tripled over the same time.
In 2022, global public debt – comprising general government domestic and external debt – reached a record USD 92 trillion. 30% of global public debt is owed by developing countries. Developing countries’ total public debt increased from 35% of GDP in 2010 to 60% in 2021.
Comparing debt levels to developing countries’ ability to generate exports shows that their ability to generate sufficient revenue to service their external debt obligations has also been deteriorating. The share of external public debt to exports increased from 71% in 2010 to 112% in 2021.
Developing countries have to pay higher interest rates compared to developed countries
Developing countries borrowing money, have to pay much higher interest rates compared to developed countries.
Countries in Africa borrow on average at rates that are four times higher than those of the United States and even eight times higher than those of Germany. High borrowing costs make it difficult for developing countries to fund important investments.
Interest payments are growing faster than other public expenditures (education, investment or health). Some regions spend more on servicing debt than serving their people.
Source: A world of debt, UNCTAD