WASHINGTON D.C.: Developing countries faced immense fiscal pressure in 2023, with a record $1.4 trillion spent on servicing foreign debt.
This reflects rising global interest rates, with debt interest payments alone surging to $406 billion. The World Bank’s latest International Debt Report highlights that the poorest countries bore a significant brunt, particularly those eligible for International Development Association (IDA) loans.
These nations recorded a steep $96.2 billion in payments, with interest expenses hitting $34.6 billion—quadruple the amount from a decade ago.
India debt
For India, foreign debt servicing also saw considerable dynamics. As of 2023, India’s long-term external debt stocks stood at $498 billion, with interest payments amounting to approximately $22.5 billion, marking a sharp increase.
 Public sector borrowing contributed to about $6.25 billion of these interest payments on foreign debt. This growing burden underscores India’s reliance on private creditors, particularly bondholders, for external debt financing​
The rise in debt servicing has limited fiscal space for developing nations to allocate resources toward crucial sectors like health and education. These trends underline the vulnerability of such economies to external shocks and the urgent need for sustainable debt management strategies​
