Developing countries' debt crossed nine trillion dollars last year

Developing countries' debt rose to a record $9.4 trillion — roughly £7 trillion — last year, according to the World Bank's annual International Debt Report, and the poorest of them are now paying the highest interest rates since the late 1980s.

The report's central finding is that the rising cost of servicing external debt is preventing some governments from investing for the future. The stock of debt is the largest the series has measured; the price of carrying it is the worst in almost four decades. Money sent to foreign creditors each year is money not spent on anything at home.

The reference date is not incidental. The late 1980s were the tail end of the last great developing-country debt crisis, the wave of defaults and restructurings remembered across much of Latin America and Africa as the lost decade. The mechanism the report describes — servicing costs crowding out investment — is the one that produced it.

The figures landed in the middle of a running argument. Demonstrators at the IMF-World Bank annual summit in Bangkok in October demanded debt relief for poorer countries; the count of what they wanted relief from was published by the World Bank, which is itself among the lenders owed the money.

Britain, under Prime Minister Andy Burnham, is preparing to champion a “new drive on debt” as part of its G20 presidency next year. The drive begins with the presidency. The interest, at rates unseen for these borrowers in almost four decades, falls due in the meantime.