World Bank: Developing economies’ debt service payment surpassed new financing for three consecutive years

By Abubakar Yunusa

The World Bank says developing economies have now spent three consecutive years paying more in debt service than they received in fresh financing, as global economic volatility intensified pressure on public finances.
In its 2025 Year in Review report titled, ‘Resilient Economies, Smart Development, and More Jobs’, released on Tuesday, the bank said last year was marked by “wild swings” in the global economy.
“The year saw wild swings in the global economy. Initial optimism shifted to widespread pessimism as countries confronted slowing global growth, geopolitical tensions, policy uncertainties, rising trade frictions, and persistent debt,” the Washington-based institution said.
“For the third year in a row, developing economies paid more in debt service than they received in new financing, hitting a 50-year high in debt outflows during 2022-2024.”
Despite the strain, the bank said the global economy proved more resilient than anticipated, with forecasters projecting growth of about 2.7 percent this year — broadly in line with expectations at the start of 2025.
The institution attributed the resilience to rapid adaptation across economies, including the reconfiguration of supply chains, accelerated adoption of digital technologies such as artificial intelligence (AI), and diversification of export markets.
Nigeria’s public debt has been on a steady rise in recent years amid persistent fiscal pressures and revenue shortfalls.
Latest figures from the Debt Management Office (DMO) show the country’s total public debt stood at about N152.40 trillion as of June 30, 2025, up from around N149.39 trillion earlier in the year.
Of this total, external debt accounted for nearly $47 billion, with the World Bank being Nigeria’s largest external creditor, with about $18 billion outstanding.
World Bank also said that it mobilised $67 billion in private capital over the past two years, up from $47 billion, reflecting what it described as “strong momentum” in attracting investment into emerging markets.
“Total commitments, including private capital mobilisation, reached $186 billion, and we raised another $79 billion from private investors through bond issuances. We’re also working to triple our guarantee business by 2030,” the institution said.
As part of that strategy, the bank said it has centralised its guarantee platform within the Multilateral Investment Guarantee Agency (MIGA) to streamline access for clients and boost guarantee issuances.
According to the lender, expanding guarantees is critical to de-risking investments and crowding in private capital at a time when fiscal constraints limit governments’ ability to fund development through public borrowing alone.
“These goals cannot be accomplished by any one government or development agency alone. To make them a reality, we must also fully mobilize the private sector,” the report said.
The bank added that its strategy remains anchored on what it described as “smart development” — focused on resilience, fiscal sustainability, trust, and job creation.
Commenting on the performance, Ajay Banga, president of the World Bank Group, said the ultimate goal of the bank is to help countries build dynamic private sectors that convert growth into local jobs “not by shifting work from developed countries, but by unlocking opportunity where people already live”.