Global public debt reached USD 102 trillion in 2024, representing an increase of USD 5 trillion from the previous year. Meanwhile, since 2010, public debt in developing countries has grown more than three times faster than in developed economies, reaching approximately USD 31 trillion.<\/p>\n\n\n\n
According to the A World of Debt Report 2025 published by UNCTAD, Asia\u2019s total public debt exceeded US$25 trillion in 2024, accounting for 24% of global public debt. This finding is consistent with the International Monetary Fund’s (IMF) analysis, which indicates that while private sector borrowing declined, government borrowing continued to increase. As a result, total global debt reached 235% of global GDP.<\/p>\n\n\n\n
Developing countries, particularly those in Asia, continue to face higher borrowing costs than many other regions. Between 2020 and 2025, the average government bond yield in Asia stood at 5.5%, compared with 7.1% in Latin America and 9.8% in Africa. Nevertheless, despite these relatively high borrowing costs, the total public debt of countries in Latin America and Africa combined remained approximately 19% lower than that of Asian countries.<\/p>\n\n\n\n
Since 2020, borrowing by developing countries has increased by two to four times, surpassing the pace of borrowing growth in the United States, which has traditionally been the world\u2019s largest borrower. In 2024, developing countries paid approximately USD 920 billion in interest on their debt, representing a 10% increase from the previous year.<\/p>\n\n\n\n
More than 61 developing countries were required to allocate over 10% of their government budgets solely to interest payments. Furthermore, more than half of all developing countries devoted a significant share of public expenditure to servicing public debt, equivalent on average to 6.5% of their export earnings.<\/p>\n\n\n\n
The report also reveals that public debt in developing countries has been growing faster than economic output, with the debt-to-GDP ratio reaching 54% during the period 2020-2024. This trend underscores the reality that signs of economic recovery remain fragile and uncertain. The situation is further compounded by rising export costs resulting from higher tariffs and increasing trade restrictions worldwide.<\/p>\n\n\n\n
One of the key reasons why public debt levels in Asia are significantly higher than those in many other regions is the growing reliance on private creditors as an alternative source of financing. Traditionally, developing countries have obtained external financing primarily through Multilateral Development Banks (MDBs) or Bilateral Donors. Financing from these sources has generally been provided on concessional terms, characterized by low interest rates and a grant element of approximately 25% of the total loan value.<\/p>\n\n\n\n
In contrast, borrowing from private creditors, including alternative financing sources and privately issued debt instruments, has become an increasingly attractive option as it can offer competitive returns and faster access to capital than traditional concessional financing. However, this financing channel also presents significant challenges. During periods of economic or geopolitical uncertainty, such as disruptions to global energy and raw material supply routes, investors tend to become risk-averse and reallocate their capital to safer and more stable markets.<\/p>\n\n\n\n
Moreover, financing from private creditors generally carries substantially higher borrowing costs, and reliance on this source has increased not only in developing countries across Asia but also in Latin America and Africa. The report further indicates that developing countries in Asia relied heavily on external financing, with outstanding external borrowing amounting to approximately US$1,984 trillion. In comparison, loans and grants provided by multilateral development banks totaled only US$868 billion, while bilateral official development assistance amounted to just US$470 billion.<\/p>\n\n\n\n
Reforming the global financial architecture has become a key priority advocated by developing countries. Proposed reform measures include increasing the participation of developing countries in revising the Debt Sustainability Framework (DSF) and strengthening governance mechanisms to enhance their capacity to manage and service public debt effectively.<\/p>\n\n\n\n
Other priority measures include expanding global liquidity support during currency and financial crises, such as through new allocations of Special Drawing Rights (SDRs), improving access to rapid financing facilities for countries facing sudden liquidity shortages, and increasing the availability of concessional financing to reduce the interest rate premium associated with borrowing from private creditors. In addition, greater utilization of regional financial cooperation mechanisms has been widely encouraged to strengthen financial resilience.<\/p>\n\n\n\n
Collectively, these reforms aim to ensure that developing countries, including those in Southeast Asia, are not trapped in unsustainable debt burdens and are able to allocate a greater share of public resources toward long-term economic and social development.<\/p>\n\n\n\n
Author:
Mr. Pipatpong Chooprasiti
Academic Officer
International Institute for Trade and Development (ITD)
www.itd.or.th
Publication: Bangkok BIZ Newspaper
Section: First Section\/World Beat
Volume: 39 Issue: 13211
Date: Wednesday, Jul. 22, 2026
Page: 8 (bottom)
Column: \u201cAsean Insight\u201d<\/p>\n","protected":false},"author":501,"featured_media":113764,"template":"","categories":[35,29],"tags":[],"class_list":["post-113763","itd-data-center","type-itd-data-center","status-publish","has-post-thumbnail","hentry","category-article-en","category-data-center-en"],"pp_force_visibility":null,"pp_subpost_visibility":null,"pp_inherited_force_visibility":null,"pp_inherited_subpost_visibility":null,"yoast_head":"\n