He World Bank warned that developing countries allocated a record figure of 1.4 trillion dollars in 2023 to pay their external debt and that interest costs reached the highest level in the last two decades.
The institution published its latest International Debt Report, in which it estimates that the total debt servicing costs of low- and middle-income countries have reached the aforementioned historical high of 1.4 trillion in 2023 , between 3.5 and 4% of its gross national income, the highest in 17 years.
Interest payments increased by almost a third to $406 billion, reducing many countries’ budgets for critical areas such as health, education and the environment, the World Bank says.
“Due to limited budgets, high interest rates and high levels of debt, resources are being diverted from critical areas such as education, health and infrastructure, and this will harm long-term growth prospects, that are already weakening,” Indermit Gill, chief economist of the World Bank Group, pointed out in a conversation with the media.
Greater pressure on the most vulnerable countries
The data show that financial pressure was most intense in the poorest and most vulnerable countries, that is, those that qualify for financing from the International Development Association (IDA), an institution that is part of the World Bank.
In 2023, these countries paid 96.2 billion to service their debt, “an unprecedented amount” and, although principal repayments decreased by almost 8% to 61.6 billion, interest costs rose to an all-time high of 34.6 billion, four times the value they had a decade ago.
With information from Efe
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