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Overview

  • 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 financing is critical for development, but unsustainable levels harm growth and the poor. Debt can be a useful tool if it is transparent, well-managed, and used in the context of a credible growth policy. But, too often, this is not the case. High public debt can inhibit private investment, increase fiscal pressure, reduce social spending, and limit governments’ ability to implement reforms.

    Debt vulnerabilities have increased in recent years in emerging-market and low-income countries. The total external debt of low- and middle-income countries climbed 5.3% to $7.8 trillion in 2018. The share of IDA countries at high risk of debt distress or in debt distress has reached 50 percent as of July 2019. Assessments by the World Bank Group found that less than half the countries reviewed met minimum requirements for debt recording, monitoring, and reporting. 

    Debt management and transparency need to be top priorities so new debt adds to growth and promotes a favorable investment climate. Policy makers in borrowing countries need reliable debt information to make sound borrowing decisions. Creditors, donors, analysts, and ratings agencies need full information to assess country debt and assess investment opportunities. Citizens can hold governments accountable if they have transparency on the terms and purpose of debt.

    Updated 3/10/20

  • The World Bank and the International Monetary fund are working together to help countries to manage their debt better. We offer technical assistance and guidance to advance a reform agenda that strengthens on a multi-pronged approach to reduce debt vulnerabilities in developing countries.

    This work focuses on three core areas:

    Debt Sustainability 

    The WBG works with the IMF to helps low-income countries achieve their development goals without creating future debt problems. Our work on debt sustainability helps client countries balance the need for funds with the ability to repay their debts.

    Read more about debt sustainability analyses

    Debt Relief

    In 1996, the WBG and the IMF launched a debt-relief program, the Heavily Indebted Poor Countries (HIPC) Initiative, in response to accumulation of unsustainable, developing-country debt in the 1970s and 1980s. It called for voluntary debt relief by all creditors, and gave eligible countries a fresh start on foreign debt that had placed too great a burden on resources for debt service. Thirty-nine countries were eligible for HIPC debt relief, and by September 2014, 35 of them had reached the “completion point,” receiving the full amount of debt relief for which they qualified.

    Read more about debt relief

    Debt Management

    The World Bank Group supports debt management offices around the world in implementing debt management strategies that determine how a government intends to borrow. Using a proactive debt management strategy can help a government find the best borrowing solutions to raise the amount of funding needed at the lowest possible level of cost and risk. The World Bank Group’s debt experts have developed a range of tools and guidelines for best practices in debt management and for helping to ensure that a country’s debt load is sustainable.

    Access the World Bank's debt management tools

  • Significant strides have been made in debt management and debt transparency. Today, more countries prepare and publish debt management strategies, the quality of debt records for government debt has improved, and many countries have improved the organization of their debt-management institutions. Find out more about how the World Bank is working with countries to ensure that developing country debt is used for the right reasons, acquired on the right terms, and reported in a transparent manner:
     

    Results Brief: Promoting Debt Transparency—Because the SDGs Depend on It
    Rising public debt in low- and middle-income countries poses a challenge to the global effort to end poverty and boost shared prosperity by 2030. The World Bank Group is scaling up its efforts to promote reforms in support of debt transparency and sustainability through its core analytical products, operational engagements, and technical assistance.
     

    Results Brief: Debt Management Facility: Guiding Countries to Smart Debt Decisions
    Since 2008, the Debt Management Facility has supported debt-management capacity building and reforms in over 80 countries. The DMF provides technical assistance, tailored advisory support, training, analytical tools, and peer-to-peer learning that strengthen countries’ ability to manage debt. Since its inception, the DMF has implemented more than 290 technical assistance missions in more than 75 countries and 15 subnational entities.


MULTIMEDIA

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VIDEO

Expert Answers: What Is Debt Transparency?

Debt Transparency – it’s a phrase that gets thrown around a lot in development circles. But what exactly is it? And why is it so important?


Is debt good or bad?

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Trust Fund

Debt Management Facility (DMF)

The DMF is a multi-donor trust fund that supports the World Bank Group's debt management work in low-income countries.

Trust Fund

Government Debt and Risk Management Program

The GDRM program assists countries in developing sustainable debt and risk management frameworks to reduce vulnerability to financial shocks.

Brief

Debt Transparency: Debt Reporting Heat Map

How transparent are IDA countries on their debt reporting practices? This heat map presents an assessment based on the availability, completeness, and timeliness of public information.

Report

Global Waves of Debt: Causes and Consequences

Debt in emerging and developing economies (EMDEs) climbed to a record US$55 trillion in 2018, marking an eight-year surge that has been the largest, fastest, and most broad-based in nearly five decades.

Additional Resources