Statsguru: Developing countries are hard hit amid rise in debt burden

Global public debt was at an all-time high of $97 trillion in 2023, growing at a compound annual growth rate (CAGR) of 5.1 per cent since 2010. Developing countries' debt hit $29 trillion last year, increasing at “twice the rate in developed countries”, according to the report “A World of Debt 2024”, released by the United Nations Conference on Trade and Development (Unctad) this month. 
            

A total of 54 developing countries spend more than 10 per cent of their revenues on interest payments, up from 29 in 2010. In India, interest payments account for over one-fourth of the revenues, inching up from 2019 levels (charts 1,2).




 

India, like many of its peers, has experienced an increase in public debt relative to its economic size after the pandemic. Public debt relative to gross domestic product was higher compared to 2019 for many emerging-market countries as well as the top five economies (chart 3).


 

Interest rates have risen after policy tightening by central banks. Yields are now higher than in 2019 for many countries (chart 4).


 

More money going for debt repayment affects the availability of funds for other things. Around 3.3 billion people reside in countries, including India, where expenditure on interest payment is higher than on education or health, according to the Unctad report.
 

The ratio of interest payments to education and health expenditure is higher in India than many of its peers. In fact, India is the only country among Brazil, Russia, India, China and South Africa (Brics) group which spends more on interest payments than on education. It also has relatively low spending on health (charts 5,6).