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External Debt: World’s poorest countries’ debt interest payments rise 35%

Graham Watson

7th December 2022

The World Bank are concerned by the fact that next year the world's poorest economies are going to see their debt interest payments rise by 35%.

In total, £63bn will be spent by 75 countries, to cover loans taken out over the last decade, meaning that as of the end of 2021, low and middle income countries owe £9 trillion in external debt - more than twice the amount they did a decade previously.

Equally, the identity of the creditors has changed - the International Development Association notes that China is going to be the largest single creditor, accounting for two-thirds of debt service payments. But the concern remains that rising debt repayments have a more significant opportunity cost in terms of lost development opportunities.

According to the World Bank:

"Almost 60% of the poorest countries are already at high risk of debt distress or are in distress. Rising interest rates & slowing growth risk tipping many into debt crises."

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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