The World Bank has warned that external debt owed by developing countries climbed 5.5% to a record $9.4 trillion in 2025, driven by higher borrowing from private creditors and renewed access to international bond markets.
In its International Debt Report 2026, released on Thursday, November 5, the Bank cautioned that rising borrowing costs and mounting debt-service obligations could leave governments with fewer resources for essential development investments.
The 2025 increase was the fastest since 2021 and roughly four times the average growth recorded between 2022 and 2024. Among the most vulnerable economies, external debt in countries eligible for concessional financing through the World Bank's International Development Association rose 8.1% to $1.3 trillion.
Private creditors accounted for much of the increase as international financial markets reopened to several emerging and developing economies. Public-sector bond issuance climbed nearly 35% to $251 billion in 2025, its highest level in five years. Some governments used the proceeds to buy back maturing debt, spreading repayment obligations over longer periods without substantially reducing overall debt stocks, while refinancing transactions often carried higher interest rates.
"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," said Haishan Fu, World Bank Group Chief Statistician and Director of Development Data.
Early 2026 data show demand for international bond financing remained strong despite elevated borrowing costs. By mid-August, more than 10 developing countries had already surpassed their full-year 2025 bond issuance, while several others returned to international markets.
Nigeria's borrowing profile reflects similar pressures. Data from the Debt Management Office show external debt rose to $54.52 billion as of June 30, 2026, from $51.90 billion in March 2026, an increase of $2.62 billion in three months. External debt stood at approximately $43.1 billion when President Bola Tinubu took office in May 2023, meaning about $11.4 billion was added by June 2026.
