Debt in developing countries breaks record at $55tn

The debt in the emerging markets and developing economies has risen to a record $55tn last year, the World Bank said on Thursday.

That record rise marked an eight-year surge that was the “largest, fastest and most broad-based in nearly five decades”.

Much of the growth in debt levels was driven by China, but most of the 100 countries covered by the World Bank analysis were affected, following an increased dependency on borrowing by both private and public sector organisations.

The analysis in 'Global Waves of Debt' revealed that the debt-to-GDP ratio of developing countries was up 54% to 168% since the debt buildup began in 2010.

On average, the debt-to-GDP ratio of the 100 countries affected rose by 7% each year.

Ceyla Pazarbaşioğlu, the World Bank’s vice-president for equitable growth, finance and institutions, said: “History shows that large debt surges often coincide with financial crises in developing countries, at great cost to the population.

“Policymakers should act promptly to enhance debt sustainability and reduce exposure to economic shocks.”

The World Bank Group’s president, David Malpass, added that the size, speed and breadth of the latest debt wave was a global concern.

“It underscores why debt management and transparency need to be top priorities for policymakers, so they can increase growth and investment and ensure that the debt they take on contributes to better development outcomes for the people.”