Poorest Countries Struggle To Pay Record Debt Costs After Rates Soar

Developing countries spent a record $1.4tn (£1.1tn) in debt payments to foreign lenders in 2023 as soaring interest rates pushed the cost of financing loans to a 20-year high, the World Bank's latest International Debt Report shows.

- Phillip Inman

The payments have left some of the world's poorest countries having to make cuts to health and education services and have limited their ability to tackle climate change.

Interest payments surged by nearly a third to $406bn, the Washington-based organisation said, benefiting banks based in financial centres such as London and New York and governments that have lent billions of pounds to low income countries.

Indermit Gill, the World Bank's chief economist, said low income countries were increasingly turning to agencies like his to fill the funding gap. "In highly indebted poor countries, multilateral development banks are now acting as a lender of last resort, a role they were not designed to serve," he said.