Escalating Debt Crisis for Developing Countries as Public Debt Soars Over a Decade

The public debt of developing nations surged dramatically from 35% of GDP in 2010 to 60% in 2021, as highlighted in a report by the Eurasian Fund for Stabilization and Development. This significant increase in borrowing from foreign creditors has heightened these economies’ vulnerability to external shocks.

The ratio of public external debt to exports increased sharply from 71% in 2010 to 112% in 2021. Similarly, the proportion of servicing public external debt compared to export revenues rose from 3.9% to 7.4% over the same period.

Between 2010 and 2021, external debt in these countries rose from 19% to 29% of GDP, while total public debt escalated from 35% to 60% of GDP. Concurrently, these nations faced a decline in their capacity to generate foreign currency through exports, crucial for servicing their foreign debt.

The report noted that the tightening of global financial conditions in 2023, driven by rate hikes from central banks in developed countries, has significantly raised debt servicing costs for these developing economies.

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