Foreign debt stock of medium and low-income developing countries rose by 5.2 percent in 2018, recording $7.8 trillion at a slower build-up rate compared to 2017, according to a recent report issued by the World Bank.
The report, which focused on international debt characteristics, listed the 10 top borrowing countries: Argentina, Brazil, China, India, Mexico, Indonesia, Russia, South Africa, Thailand, and Turkey.
Net debt flows to the medium and low-income countries, total payments minus payments on principle loans, decreased by 28 percent in 2018, recording $529 billion, while financial flows to these countries, including loans and property rights, declined by 19 percent in 2018, except China, which recorded a decrease of 29 percent, according to the report.
"Debt burdens may cause economic shocks," the report warned.
“There are more countries with higher debt-to-GNI levels. Since 2009, a smaller share of low- and middle-income countries have debt-to-GNI ratios below 30 percent (down to 25 percent of countries in 2018 from 42 percent of countries). And over the last ten years, the proportion of countries with debt-to-GNI rations above 60 percent has risen to 30 percent and the share of countries with debt-to-GNI ratios above 100 percent has risen to 9 percent,” the report said.
The report asserted that “a slowdown in new borrowing underscores investors’ concerns about debt sustainability in some of the countries that are eligible to borrow from the International Development Association (IDA), the World Bank’s fund for the poorest countries.”
The net loan flows to the countries that are qualified to borrow from the IDA increased by 32 percent in 2018, raising foreign debts for these countries by 6 percent, recording $ 388 billion.