Annual International Debt Report (IDR) 2024

Recently, World Bank Released Annual International Debt Report (IDR) 2024

About Annual International Debt Report

• It provides detailed information on external debt for low- and middle-income countries

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• Key Contributions of the IDR
• Data Insights: Tracks borrowing patterns and new lending methods.
• Debt Relief Impact: Assesses the outcomes of initiatives to reduce debt burdens.
• Transparency Promotion: Encourages accurate debt recording and reporting.

Key Findings of the International Debt Report 2024

The report highlights trends and developments in external debt for low- and middle-income countries (LMICs) over the past decade (2013–2023), with a focus on 2023.

• Trends in External Debt Stock (2013–2023)
  • The total external debt stock of LMICs grew by 2.4% in 2023, reaching US$8.8 trillion.
  • The increase in long-term debt was largely due to higher borrowing from multilateral creditors.
  • Trends in External Debt Flows (2013–2023)
    • Net debt flows (disbursements minus repayments) turned positive in 2023, totaling US$220.7 billion.
    • This was a significant recovery (fivefold increase) compared to 2022 but remained lower than the levels seen between 2017 and 2021.
  • Trends in Net Transfers on External Debt (2013–2023)
    • Higher interest payments negatively impacted net debt transfers.
    • Net debt transfers reflect the difference between the amounts borrowed (new disbursements) and the amounts repaid (interest and principal).

• Debt Ratios and Debt Resolutions
  • The debt-to-GNI ratio for LMICs (excluding China) slightly decreased by 0.8 percentage points, standing at 34.4% in 2023.
  • This ratio has been on a declining trend since reaching a two-decade high of 41.8% in 2020.
• Debt Servicing Burdens (2013–2023)
  • LMICs faced record-high debt servicing costs of US$1.4 trillion in 2023 (principal and interest payments).
  • For LMICs excluding China, debt servicing costs increased by 19.7%, reaching US$971.1 billion—almost double the amount recorded a decade ago.
  • Role of Multilateral Lenders
    • Multilateral lenders, such as the World Bank, IMF, and regional development banks, became the primary source of financial support for LMICs during the pandemic and beyond.
    • Their support included emergency relief and balance-of-payments assistance.
    • Borrowing from private creditors fell due to:
      • Adverse market conditions.
      • Reduced investments in emerging markets.
      • A shift towards concessional loans from official creditors in IDA-eligible countries.
• Growth in Debt Stock from Official Lenders
  • Long-term debt stock owed to the World Bank and IMF by LMICs has grown by 63.1% since the pandemic, compared to marginal growth in private lending.
  • LMICs (excluding China) owed US$421.8 billion to the World Bank’s lending arms in 2023, accounting for 34% of all multilateral creditors’ debt.
• Rising Interest Rates and Costs
  • Interest rates on new loans increased significantly in 2023:
    • Official creditors: Rates rose by 2.1 percentage points to 4.09%.
    • Private creditors: Rates increased by 1.37 percentage points to 6.0%, the highest since 2008.

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