Home Business Debt stocks of developing countries rose to $7.8trn in 2018- World Bank

Debt stocks of developing countries rose to $7.8trn in 2018- World Bank

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The World Bank’s International debt Statistics 2020 has revealed that total external debt of low- and middle-income countries climbed 5.3 per cent to $7.8 trillion last year.

The report by World Bank on Tuesday said net debt flows (gross disbursements minus principal payments) from external creditors tumbled 28 per cent to $529 billion in 2018.

The report explained that although on average the external debt burden of low- and middle-income countries was moderate, several countries have been on a deteriorating debt trajectory since 2009, the report indicates.

The share of low- and middle-income countries with debt-to-GNI ratios below 30 per cent has shrunk to 25 per cent, down from 42 per cent ten years ago. Similarly, the share of countries with high debt-to-export ratios has climbed.

The World Bank Group President, David Malpass said “To grow faster, many developing countries need more investment that meets their development goals.

“Debt transparency should extend to all forms of government commitments, both explicit and implicit. Transparency is a critical part of attracting more investment and building an efficient allocation of capital, and these are essential in our work to improve development outcomes.”

The report explained further that debt stocks were driven up by a 15 per cent jump in China, fueled by investor appetite for renminbi-denominated assets.

“Excluding the ten largest borrowers (Argentina, Brazil, China, India, Indonesia, Mexico, the Russian Federation, South Africa, Thailand, and Turkey), external debt stocks rose four per cent.

“Sub-Saharan countries excluding South Africa saw debts stocks swell by eight per cent on average in 2018, and over half the countries in the region have seen external debt stocks double since 2009,” the report by World Bank explained.

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