Figures released today by the Jubilee Debt Campaign, based on IMF and World Bank databases, show that developing country debt payments increased by 45% between 2014 and 2016. They are now at the highest level since 2007.

The rapid increase comes after falls in commodity prices in mid-2014 and the rising value of the US dollar. These changes have reduced the income of many governments which are reliant on commodity exports for earnings. They have also caused exchange rates to fall against the US dollar, which increases the relative size of debt payments as external debts tend to be owed in dollars.

Low interest rates in Western countries have also driven a large increase in lending to developing countries in recent years. External loans to low and lower middle income countries have more than quadrupled between 2008 and 2016.

The new figures from Jubilee Debt Campaign show that average government external debt payments across the 122 developing countries for which data is available have increased from 6.7% of government revenue in 2014 to 9.7% of government revenue in 2016, an increase of 45%. This is the highest level since 2007, when such payments were also 9.7% of government revenue.

Tim Jones, economist at the Jubilee Debt Campaign, said:

“The rapid increase in debt payments in many countries comes after a boom in lending, a fall in commodity prices, the rising value of the US dollar and now increasing dollar interest rates. This is putting pressure on government budgets, just when more spending is needed to meet the Sustainable Development Goals.

“In countries where debt crises have arisen, the danger is that IMF and other loans will bail out reckless lenders, increasing debt burdens, and leading to years of economic stagnation, just as in Greece. Instead, reckless lenders should be made to shoulder some of the costs of recent economic shocks by accepting lower payments.”