A global debt crisis is looming

After a decade of debt accumulation, higher interest rates and growing refinancing needs have left the global economy increasingly exposed to shocks. And with ongoing conflicts driving up energy prices, renewed inflationary pressures are testing the limits of the existing debt architecture.

The outlook is especially worrying for developing countries, where public debt totalled $35 trillion in 2025, up 10.5% in the space of a year. According to the UN Development Programme, “the median developing country now spends about 9.5 percent of government revenue on interest payments, the highest share in 25 years.” There are 32 low-income countries in debt distress or at high risk of it. Yet restructurings with private creditors take an average of 2.5 years, twice the length of the process before the pandemic.