Get Guardian on GoogleDeveloping countries’ external debt rose by 5.5 per cent to a record $9.4 trillion in 2025, the fastest yearly increase since 2021, as borrowing costs for the poorest nations climbed to their highest levels in decades.
Nigeria’s external debt also increased, rising to $54.52 billion as of June 30, 2026, from $43.16 billion in June 2023, according to the Debt Management Office (DMO).
The World Bank disclosed the global figures in its International Debt Report 2026, released in Washington yesterday, warning that rising debt servicing costs could leave vulnerable countries with less money for healthcare, education and other essential services.
Nigeria’s total public debt stood at N166.79 trillion ($120.93 billion), comprising N91.59 trillion in domestic debt and N75.20 trillion in external debt. Eurobonds accounted for $18.55 billion of its external obligations, while the World Bank Group was the country’s largest multilateral creditor, with $20.73 billion.
The increase in developing countries’ external debt was nearly four times the average growth recorded between 2022 and 2024, reflecting renewed access to international financing even as borrowing costs remained high.
Private creditors accounted for much of the increase as bond markets reopened to developing economies. Bond issuance by public entities rose nearly 35 per cent to $251 billion, the highest level in five years.
Nigeria returned to the international bond market in November 2025, raising $2.35 billion through a Eurobond issuance that attracted orders worth $13 billion.
The World Bank noted that many governments issued new bonds to refinance maturing debt, easing immediate repayment pressures without significantly reducing their overall debt burden. Some also incurred higher interest costs in the process.
Some of Nigeria’s outstanding Eurobonds were issued at yields of up to 10.375 per cent, although secondary-market yields ranged from about 5.3 to 8.3 per cent in 2026 trading.
Debt increased faster in the poorest and most vulnerable economies. External debt in countries eligible for concessional financing from the World Bank’s International Development Association (IDA) rose by 8.1 per cent to $1.3 trillion.
These countries paid an average interest rate of 8.2 per cent on new private loans in 2025, the highest since 1989, while new bond issues attracted an average rate of 9.4 per cent.
The gap between borrowing costs from private and official creditors widened to 5.5 percentage points from 3.4 percentage points in 2016. In comparison, countries eligible only for non-concessional loans from the International Bank for Reconstruction and Development (IBRD) paid an average of 5.5 per cent on new bonds, down from 5.8 per cent in 2024.
Across low- and middle-income countries, debt service payments, covering principal and interest, rose by 1.9 per cent to $1.4 trillion in 2025, marking the fifth consecutive annual increase.
Nigeria paid $870.73 million to service its external debt in the second quarter of 2026, with interest accounting for more than half of the amount. This was lower than the $1.80 billion paid in the fourth quarter of 2025.
However, the country’s total debt service obligations, including domestic debt, rose to about N16 trillion in 2025.
Globally, payments to bondholders reached $363 billion in 2025, partly driven by debt buybacks and early repayments financed through new bond sales.
Between 2022 and 2025, developing countries paid $436 billion more in debt service than they received in new financing. However, long-term financial flows recorded a net inflow of $45 billion in 2025, reversing a net outflow of $118 billion in 2024.
A weaker United States dollar also contributed to the increase in reported debt. Currency movements accounted for more than a quarter of the $303 billion rise in public and publicly guaranteed debt by increasing the dollar value of obligations denominated in other currencies
