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Economy

Developing Countries Spend Record Share of Revenue on Debt Interest

BirrMetrics · 3 hours ago · Read the Full Story on BirrMetrics
Developing Countries Spend Record Share of Revenue on Debt Interest
AI SUMMARY

Developing countries are spending a median of 9.5 percent of government revenue on debt interest payments, the highest in 25 years, amid rising borrowing costs and compounding global crises.

  • Developing countries are spending a median of 9.5 percent of total government revenue on sovereign debt interest payments, marking a 25-year high.
  • The median interest burden in developing economies is more than three times the corresponding burden in high-income economies.
  • Reported interest burdens exclude principal repayments, meaning total obligations are higher.
  • Yields on 10-year United States Treasury bonds reached 5.3 percent, their highest level since 2002.
  • Ten-year borrowing costs for weaker-credit developing sovereign issuers have climbed to an average of approximately 9 percent.
  • Global crude oil prices are trading above 100 US dollars a barrel.
  • Global fossil fuel subsidies could exceed one trillion US dollars in 2026.
  • Government interventions prevented approximately 130 million additional people from falling into poverty this year.
  • Sub-Saharan Africa, South Asia, and East Asia are particularly exposed to borrowing costs, commodity price volatility, and reduced fiscal capacity.
  • Ethiopia is implementing economic reforms under a 3.4 billion US dollars IMF programme approved in July 2024 and negotiating external debt restructuring.
  • Ethiopia announced an agreement in principle in June 2026 with a committee representing 45 percent of its Eurobond holdings, proposing an 880 million US dollars replacement bond.
  • The UNDP warns that the current El Niño event could become the strongest on record, threatening agricultural production and food security.
  • The UNDP recommends that developing governments gradually replace broad, untargeted subsidies with temporary assistance directed at vulnerable households.
Read the Full Story on BirrMetrics
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