Debt-service payments from IDA’s countries to top $62bn in 2022: World Bank

Washington, USA – Debt-service payments from the International Development Association’s (IDA) countries are projected to top $62 billion in 2022, the World Bank’s new International Debt Report shows.

The poorest countries eligible to borrow from the World Bank’s IDA now spend over a tenth of their export revenues to service their long-term public and publicly guaranteed external debt—the highest proportion since 2000, shortly after the Heavily Indebted Poor Countries (HIPC) initiative was established.

The report highlights rising debt-related risks for all developing economies—low- as well as middle-income economies. In 2021, the external debt of these economies totaled $9 trillion, more than double the amount a decade ago. During the same period, the total external debt of IDA countries nearly tripled to $1 trillion. 

Rising interest rates and slowing global growth risk tipping a large number of countries into debt crises. About 60 percent of the poorest countries are already at high risk of debt distress or already in distress.

By 2021 end, IDA-eligible countries’ debt-service payments on long-term public and publicly guaranteed external debt totaled $46.2 billion—equivalent to 10.3 percent of their exports of goods and services and 1.8 percent of their gross national income (GNI), according to the report. 

Those percentages were up significantly from 2010, when they stood at 3.2 percent and 0.7 percent respectively. In 2022, IDA countries’ debt-service payments on their public and publicly guaranteed debt are projected to rise by 35 percent to more than $62 billion, one of the highest annual increases of the past two decades. 

China is expected to account for 66 percent of the debt-service payments to be made by IDA countries on their official bilateral debt.

Over the past decade, the composition of debt owed by IDA countries has changed significantly. The share of external debt owed to private creditors has increased sharply. At the end of 2021, low- and middle-income economies owed 61 percent of their public and publicly guaranteed debt to private creditors—an increase of 15 percentage points from 2010. IDA-eligible countries owed 21% of their external debt to private creditors by the end of last year, a 16-point increase from 2010. The rising debt vulnerabilities underscore the urgent need to improve debt transparency and provide more complete debt information to strengthen countries’ ability to manage debt risks and use resources efficiently for sustainable development.

Over the past five years, the International Debt Statistics database has identified and added $631 billion of previously unreported loan commitments, and an additional $44 billion were identified in 2021. 

The total of these newly documented additional loan commitments over the past five years is equivalent to more than 17 percent of the total outstanding public and publicly guaranteed debt stock in 2021.