Developing Several countries, such as Nigeria, are experiencing a significant debt crisis, with overall foreign debts amounting to $8.9 trillion in 2024, as stated in the World Bank's most recent 2025 International Debt Report.
From 2022 to 2024, these countries paid $741 billion more in principal and interest compared to what they obtained through new loans, marking the biggest deficit in at least half a century, highlighting increasing strain on government budgets and causing worries among international creditors and investors.
Although there was some respite in 2024 with global interest rates reaching their peak and bond markets reopening, the scenario continues to be unstable, according to the institution's report published in December.
Countries prevented defaults by restructuring $90 billion in foreign debt, marking the biggest yearly restructuring since 2010. Private investors offered $80 billion additional funding compared to what they got back through payments, allowing multiple nations to carry out major billions-dollar issues. However, this influx was expensive; interest rates remained near 10 percent, about twice as high as before 2020.
The World Bank Group's Chief Economist and Senior Vice President for Development Economics, Indermit Gill, stated, "Although global financial circumstances could be getting better, developing nations shouldn't fool themselves; they still face risks."
Their accumulation of debt remains ongoing, often through novel and harmful methods. Leaders across the globe should take full advantage of the current temporary relief to stabilize their financial situations, rather than quickly returning to international debt markets.
Nigeria, classified as an IDA-eligible country, is among the largest borrowers from the World Bank’s concessional financing arm. In 2024, the World Bank provided $18.3bn more in new financing than it received in repayments from IDA-eligible countries, along with a record $7.5bn in grants.
Such support remains critical, as bilateral creditors, mainly foreign governments, have largely retreated, collecting $8.8bn more in repayments than they disbursed in new financing, following debt relief initiatives that in some cases reduced long-term debt by as much as 70 percent.
At the same time, the nation's foreign debt amounted to roughly $47 billion for its more than 200 million residents as of June 2025, an increase from $45.97 billion during the first quarter of 2025, reported the Debt Management Office.
Moreover, the report emphasized the societal effects of elevated debt amounts. Low-income nations allocated an unprecedented $415 billion solely toward interest payments in 2024, money that might have been utilized for education, medical services, and critical infrastructure development.
Among the most highly indebted nations, where foreign debt surpasses 200% of their export earnings, approximately 56% of the people struggle to purchase the basic daily nutrition required for sustained well-being. In countries eligible for assistance from the World Bank’s IDA program, including Nigeria, almost two-thirds of the population encounter similar difficulties.
The report highlights an increasing dependence on local funding sources. Out of 86 nations with relevant information, over half experienced quicker growth in domestic public debt compared to foreign debt in 2024.
Although this indicates advancement in building local financial markets, significant internal borrowing poses dangers. It may lead domestic banks to favor government securities over loans to the private sector, and because of shorter terms, it could raise the expenses associated with rolling over debt, as noted by the bank.
"The growing trend among numerous developing nations to seek funding from local resources indicates a significant achievement in policy," stated Haishan Fu, the Chief Statistician and Director of the Development Data Group at the World Bank Group.
It indicates that their local capital markets are progressing. However, significant internal borrowing may encourage domestic banks to accumulate government bonds instead of extending loans to the local private sector. Domestic debt often has shorter terms, increasing the expense of refinance. Governments must exercise caution to avoid excess.
Supplied by SyndiGate Media Inc. Syndigate.info ).
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