GENEVA, 9th October, 2026 (WAM) -- Rising borrowing costs are adding pressure on developing countries’ public finances, limiting the resources available for health, education and other development priorities, UN Trade and Development (UNCTAD) warns in its latest “World of debt” publication.
“Debt should help countries invest in their future. But in many developing countries, the servicing of external debt now exceeds new inflows”, says the report, highlighting a broader shift in the role of debt.
The UNCTAD report shows that global public debt reached $111 trillion in 2025, up from $49 trillion in 2010. Though more than two-thirds of the total stock is held by developed economies, debt has increased much faster in developing countries.
Borrowing costs remain persistently higher for developing countries, which paid an average interest rate of 5.2% on public debt, compared with 2.2% in developed countries.
As a result, interest payments on public debt in developing countries rose from $363 billion in 2010 to nearly $1 trillion in 2025.
The rising cost of debt is increasingly affecting governments’ ability to invest in essential public services. In 51 developing countries, home to 3.7 billion people, interest payments on public debt exceeded government spending on health or education.
Narrowing the borrowing-cost gap could bring substantial gains, the UNCTAD report suggests.
If developing countries could borrow at rates comparable to those paid by developed economies, they could save an estimated $500 billion a year in interest payments.
That amount could finance about 1.3 million primary healthcare centres or provide a minimum-diversity diet for around 1.6 billion children annually.