Nigeria, Others Pay Highest Interest Since 1989 Amid $9.4trn Debt—World Bank

Developing countries are paying their highest borrowing costs in decades as their external debt hit a record $9.4 trillion in 2025, the World Bank Group has said in its International Debt Report 2026.

The report showed that countries eligible for the Bank’s concessional International Development Association (IDA) loans paid an average of 8.2 per cent on new private-creditor commitments in 2025, the highest rate since 1989. They paid 9.4 per cent on new bonds.

Nigeria is among the IDA borrowers. It owed the IDA about $19.12 billion as of June 30, 2026, according to the Debt Management Office (DMO).

Developing countries’ external debt rose 5.5 per cent to $9.4 trillion, the fastest pace since 2021 and about four times the 2022-24 average. Debt in IDA-eligible countries grew faster, up 8.1 per cent to $1.3 trillion.

“The return of private lending to low- and middle-income countries is welcome, but these countries are borrowing more, paying more, and in many cases leaving less for long-term development,” said Haishan Fu, World Bank Group chief statistician and director of Development Data.

The gap between what IDA-eligible countries pay private and official creditors widened from 3.4 percentage points in 2016 to 5.5 points in 2025. Countries eligible only for the Bank’s non-concessional loans paid an average of 5.5 per cent on new bonds, down from 5.8 per cent.

Low- and middle-income countries paid $1.4 trillion in principal and interest in 2025, up 1.9 per cent and the fifth straight annual rise. Between 2022 and 2025, they paid $436 billion more in debt service than they received in new financing.

Nigeria’s own external debt service stood at $5.15 billion in 2025, up 10.6 per cent from the previous year. Eurobond repayments were about $2.49 billion of that. (nairametrics)

Bond issuance by public entities rose nearly 35 per cent to $251 billion, the highest in five years. Many governments issued new bonds to repay maturing debt, which smoothed repayment schedules without significantly cutting debt stocks, often at higher rates.

Long-term debt flows turned to a net inflow of $45 billion in 2025, from a $118 billion net outflow in 2024.