The World Bank reveals how low and middle-income economies borrowed 3 times more money in 2017 than in the previous year

Low and middle-income economies borrowed three times more money in 2017 than they did in 2017, according to a report from the World Bank.

The bank’s International Debt Statistics 2019 recorded that low and middle-income economies’ debt has heaved to $607 billion in 2017 from $181 billion the previous year. This, the bank said, is the highest level which the countries have accumulated in three years, as net debt inflows surpassed equity inflows for the first time since 2013.

The net financial inflows including debt and equity have jumped to $1.11 trillion, recording the highest level in four years.

“External debt stocks of low and middle-income countries rose to $7.1 trillion last year, a 10 per cent increase from 2016. The ratio of debt-to-gross national income (GNI) on average was steady at 25 per cent and the ratio of debt-to-export earnings declined to 102 per cent.

Nevertheless, 11 low and middle-income countries, including Lebanon, Mongolia and Mozambique, have debt-to-GNI ratios of over 100 per cent, the data shows.

It further indicated that the Sub-Saharan African countries added almost 16 per cent more external debt.

“South Asian economies added to external debt stocks by 11 per cent, and economies of the Middle East and North Africa increased external debt stocks by close to 12 per cent,” the statement revealed.

Also, “external debt stocks rose by almost 3 per cent in the countries of Eastern Europe and Central Asia and In Latin America and the Caribbean.”

The data indicated that the net public and publicly guaranteed bond issuance accounted for 85 per cent of net long-term debt inflows from all official and private creditors combined. New bond issuance jumped to a record high of $355 billion in 2017 from $196 billion in 2016.

The new commitments to the International Development Association (IDA)-eligible countries from private creditors also rose to $9.2 billion in 2017, more than three times the amount in 2016.