The IDR features external debt statistics and analysis for low- and middle-income countries (LMICs) that report to the World Bank's Debtor Reporting System (DRS).

Key highlights

• Rising External Debt: Total external debt of LMICs rose by 2.4% in 2023, reaching $8.8 trillion. 
• Factors Driving Indebtedness
  • High Interest Rates: Tight monetary policies in high-income countries pushed interest rates to a 20-year high.
    • Bangladesh and India experienced over 90% increases in interest payments in 2023.
  • Other Factors: Inflation, depreciating currencies, and global economic uncertainty due to armed conflicts and trade fragmentation.
• Impact of rising debt: Budget strain impacted critical sectors like health, education, and environmental programs.

Way Ahead 

To promote sustainable and inclusive debt solutions, the UN Trade and Development earlier proposed the following measures:

• Global Financial Reforms: Comprehensive reforms to prevent a widespread debt crisis and create an inclusive financial system.
• Mitigating Predatory Lending: Increase concessional financing and reduce information asymmetry (between lender and borrowers) and discourage exploitative lending practices.
• Crisis Resilience: Implement climate-resilient debt clauses and standstill rules to pause repayments during crises.
• Improved Restructuring Mechanisms: Establish automatic restructuring rules and a Global Debt Authority to guide and coordinate sovereign debt management.