Scale and Speed of the Debt Rise
Since 2010, the debt‑to‑GDP ratio in developing economies has risen by 54 percentage points, reaching 168 percent. That works out to an average increase of roughly seven points each year. The last time such a rapid buildup occurred was during the Latin American debt crisis of the 1970s, and even then the pace was almost three times slower. World Bank President David Malpass highlighted the concern on December 23, noting that the size, speed and breadth of the current wave should worry everyone.
How the Creditor Landscape Has Shifted
Earlier major debt episodes — Latin America in the 1980s, Asia in the late 1990s and the global financial crisis of 2007‑2009 — were dominated by public borrowing from traditional lenders such as the World Bank or Western governments. That created a relatively closed system of creditors and borrowers. Today’s wave is different because the list of lenders has opened up. China has become a major source of financing for many developing countries, while private bondholders and non‑traditional financial institutions have also entered the market. The resulting blend of public and private loans from a broader set of actors makes the debt picture harder to monitor and harder to resolve.
Transparency, Risk and the $55 Trillion Total
The World Bank’s study “Global Waves of Debt” recorded that emerging and developing economies owed a combined $55 trillion in 2018, the fastest and largest accumulation of debt in half a century. This total includes both government and private liabilities, meaning households and firms are leveraged alongside sovereigns. When private debt turns sour, it often ends up on the public balance sheet through bailouts, stimulus measures or lost tax revenue. Malpass warned that if debt stops financing productive investment and instead fuels consumption, corruption or interest on older debt, it can shift from a growth engine to a source of collapse. The current pace — seven percentage points of GDP per year — leaves little room for new, productive spending; much of the borrowing is used merely to service existing loans.
Policy Implications and the Path Forward
Malpass urged lawmakers to make debt management and
