Context: The newly published  International Debt Report (IDR) 2024 includes an analysis of end-2023 external debt flows and debt stock positions as well as the macroeconomic and debt outlook for 2024 and beyond, and updates on the debt transparency agenda.

• It is a longstanding annual publication of the World Bank featuring external debt statistics and analysis for the low- and middle-income countries that report to the World Bank Debtor Reporting System (DRS).

• 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.

Road 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.