Global public debt reached a record high of $92 trillion in 2022, according to a report by the United Nations. The increase in debt was primarily driven by governments borrowing to address crises like the COVID-19 pandemic. Developing countries bear the brunt of this burden, with nearly 30 percent of the global debt belonging to them. China, India, and Brazil account for 70 percent of this debt. Furthermore, 59 developing countries have a debt-to-GDP ratio exceeding 60 percent, indicating high levels of debt.
The report highlights the adverse impact of debt on developing countries. Limited access to financing, rising borrowing costs, currency devaluations, and sluggish growth have been the result. The UN also points out that the international financial system does not adequately support developing countries in obtaining affordable financing. Net interest debt payments exceed 10 percent of revenues for 50 emerging economies globally.
The consequences of debt are particularly severe in Africa, where interest payments surpass spending on education and health. In fact, 3.3 billion people in countries across the world spend more on debt interest payments than on critical areas like health and education.
When it comes to external public debt, private creditors comprise the majority, representing 62 percent of total debt in developing countries. Africa has seen an increase in creditor participation, growing from 30 percent in 2010 to 44 percent in 2021. Latin America has the highest ratio of private creditors holding external government debt, at 74 percent for the region.