In 2023, developing nations faced an extraordinary burden, paying $1.4 trillion to manage their foreign debts, as reported by the World Bank in its recent international debt report. This figure marks the highest interest costs in two decades.

The most vulnerable countries were particularly affected, contributing over $96 billion, which included nearly $35 billion solely for interest payments. These escalating expenses have compelled many nations to turn to multilateral lenders, such as the World Bank, for support.

The World Bank identified elevated global interest rates as the primary driver of these rising debt costs. Interest rates on loans from official creditors have surged to over 4%, while those from private lenders have climbed to 6%, the highest level in 15 years.

Despite a slight decline in rates in advanced economies, including the United States, they still exceed pre-pandemic levels, placing additional pressure on developing countries.

As borrowing costs are projected to remain high, these nations are confronted with significant challenges in sustaining economic stability while tackling urgent issues like poverty alleviation and infrastructure development.