According to the newest World Bank Report, in 2022, as interest rates surged to the highest rates in four decades, developing nations spent $443.5 billion servicing their external debt, a new record.

According to the report, this drained scarce resources away from critical needs of the nation’s populations, such as health, education, and the environment.

There was a 5% increase in debt service payments over the prior year across all developing nations, according to the report. Furthermore, the report showed that the 75 nations which were eligible to take out loans from the World Bank’s International Development Association,  which was designed to support the most impoverished nations, paid out $89 billion to service their debts in 2022, a record amount.

According to the report, as of last year, interest payments had quadrupled over the last decade, reaching an all-time record of $23.6 billion. The report went on to note that it is expected that 2023 and 2024 will see debt servicing costs for the 24 poorest nations balloon, increasing by up to 39%, according to the financial institution.

Indermit Gill, the World Bank Group’s chief economist and senior vice president said, “Record debt levels and high interest rates have set many countries on a path to crisis. Every quarter that interest rates stay high results in more developing countries becoming distressed – and facing the difficult choice of servicing their public debts or investing in public health, education, and infrastructure.”

Gill went on to say that the developing world could be looking at “another lost decade” as a result of the lack of coordinated actions by debtor governments, official and private creditors, and multilateral financial institutions.

As interest rates have increased, the World Bank has said that debt vulnerabilities in developing nations have been intensifying. The lender has noted that just in the last three years, there were 18 sovereign defaults in ten developing nations. That is more that the world had seen in the previous twenty years. The report went on to warn that at present 60% of low-income countries are at high risk of undergoing a default from their debts, or they already are on their way to it.