Achieving the Sustainable Development Goals requires significant investments—in infrastructure, human capital, and climate change resilience. But governments in developing countries are often limited in their ability to mobilize domestic revenues or private investment.
Debt is a critical tool for filling this gap and financing the investments needed for sustained economic growth. When used wisely, debt can help governments invest in productive infrastructure or support social spending. But countries must borrow prudently—for the right reasons and on the right terms—in order to safeguard economic stability. The World Bank Group works with countries to make sure that debt is driving development, not obstructing it.
Debt vulnerabilities have increased in emerging market and low-income countries. Borrowing by low- and middle-income economies from external official and private creditors surged to $607 billion in 2017 from $181 billion the previous year. External debt stocks of low- and middle-income countries rose to $7.1 trillion in 2017, a 10% increase from 2016. At the same time, countries are borrowing from a diverse set of creditors with an increasingly diverse set of instruments.
Countries and creditors must be transparent about public debt. Policy makers require reliable debt information to make informed borrowing decisions. Citizens need to know how their governments are spending public funds. And creditors, donors, analysts, and rating agencies rely on transparent records to assess sovereign creditworthiness, and to appropriately price debt instruments.