Emerging economies are facing an unprecedented increase in external debt obligations, as repayments of principal and interest outpaced new financing by 741 billion US dollars between 2022 and 2024, the World Bank said in its International Debt Report released Wednesday. The gap is the largest recorded in at least 50 years.

The rise in repayments is closely linked to higher borrowing costs. Average interest rates for these countries reached levels not seen since before the 2008-2009 global financial crisis, pushing total external debt to a record 8.9 trillion US dollars in 2024.

Some governments have nonetheless returned to international markets amid stabilising financial conditions. Suriname raised 1.6 billion US dollars through a debt sale in October, two years after emerging from default, while Angola issued 1.75 billion US dollars in eurobonds following a three-year absence. Narrowing spreads on emerging-market bonds over US Treasuries have facilitated these transactions.

The report also highlights the broader implications for public finances. In countries where external debt exceeds 200 percent of export revenue, more than half of the population cannot afford the minimum daily diet required for basic health. Rising debt repayments are limiting funding for education, healthcare, and other essential services.

Half of low-income countries are now classified as at high risk of debt distress or already in it. Mozambique, Senegal, Mongolia, Egypt, and Colombia recorded the highest interest payments on external debt relative to export earnings in 2024. The World Bank recommended coordinated debt restructuring and careful fiscal management to mitigate risks.

“Policymakers should use the current market conditions to stabilise fiscal positions rather than returning hastily to external debt markets,” said Indermit Gill, the World Bank’s chief economist.