According to the calculations of the World Bank (WB), the drain associated with the interests rose by almost a third to reach 406 billion, which reduced the budgets of many states for critical areas such as health, education and the environment.
According to the data, the financial pressure was greater in the poorest and most vulnerable nations, that is, in those that meet the requirements to receive financing from the International Development Association (IDA), institution belonging to the World Bank, indicated the organization.
In 2023, it specified, these countries paid an unprecedented amount of 96.2 billion to cover the service of their debt.
While principal repayments fell by almost eight percent to $61.6 billion, interest costs rose to a record high of $34.6 billion in 2023, four times what they were a decade ago, the Bretton Woods institution acknowledged.
On average, the analysis states, IDA client countries’ interest payments now amount to about six percent of their export earnings, a level not seen since 1999, and in some countries, the proportion rises to 38 percent.
With credit conditions tightening, the World Bank and other multilateral institutions became the main source of assistance to the poorest economies, the document notes.
Since 2022, the World Bank argued, foreign private creditors received debt service payments from public sector borrowers in IDA-eligible economies for almost $13 billion more than they disbursed in new financing.
Meanwhile, the Bank and other multilateral institutions contributed almost 51 billion more in 2022 and 2023 than they collected in debt service payments, the statement alleged.
At the end of last year, the total external debt of The drain on poor countries from external debt increased, a report states low and middle-income countries amounted to 8.8 trillion dollars, which represents an increase of eight percent compared to 2020.
The percentage increase was more than double in countries that can receive financing from the IDA, whose total external debt reached 1.1 trillion dollars, an increase of almost 18 percentage points, the WB specified.
In 2023, it warned, there was a notable increase in the cost of external loans for all developing countries: the interest rates of official creditors doubled to over four percent, and those of private creditors rose more than one point and reached six percent, the highest value in 15 years.
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