Debt payments, which include principal and interest, have increased as average interest rates for developing nations rose to the highest levels since just before the financial crisis of 2008-09, the Bank said in its latest International Debt Report 2025. Their external debt reached a record $8.9 trillion in 2024.
“It’s imperative, therefore, for policy makers everywhere to make the most of the breathing room that exists today, because the luxury could vanish tomorrow,” said Indermit Gill, chief economist at the Bank, in a statement.
“That means putting the debt burdens of developing countries back on a sustainable path—by putting the fiscal house in order and reducing sovereign risks in ways that spur productive investment,” he added.
India’s external debt saw a moderate increase even as the World Bank sounded an alarm on rising debt vulnerabilities across developing economies.
India’s external debt rose to $716.5 billion in 2024 from $647.6 billion in the year before. Interest payments increased to $25.3 billion from $22.5 billion.
The report noted that 2024 recorded increase in bond issuance by the government and private entities, supported by lower borrowing costs and rising investor demand following India’s inclusion in global bond indices.
India entered the J.P. Morgan Government Bond Index–Emerging Markets in mid-2024 and was added to the FTSE Russell Emerging Markets Government Bond Index in 2025.
Lending from international financial institutions to Indian private sector borrowers also hit record levels in 2024.
In South Asia, net inflows rose 106% to $83.5 billion in 2024, the highest in the decade, driven by nearly a 100% increase in net long-term inflows from private creditors to $57.5 billion, all of which was directed to India, the report mentioned.
“This rise in external debt stock, the largest of any region in 2024, was driven by a 10.6 percent increase in India, which accounts for 80 percent of the region’s external debt stock.”