Global government debt servicing costs have reached a record $1.5 trillion

Rising interest rates have sharply increased the cost of servicing public debt worldwide. According to the EBRD, in 2024 alone, global interest payments on public debt rose by $500 billion to reach $1.5 trillion—about 0.5% of global GDP.

At the same time, the debt burden itself continues to grow. In developed countries, the public debt-to-GDP ratio increased from 104% in 2019 to 115% in 2024. In developing economies, the ratio rose from 56% to 70%.

The bank’s analysts warn that debt servicing is gradually beginning to “eat into” resources that could be directed toward investment and economic development. This refers to the so-called “debt overhang” effect, where governments are forced to reallocate spending in favor of debt payments.

An additional risk stems from many countries’ high dependence on global interest rates and the currency composition of their debt. For countries with dollar-denominated obligations, the weakening of the U.S. dollar in 2025 temporarily eased pressure on budgets; however, analysts view this effect as short-term.

“Amid high uncertainty in global markets, risks to public finances, particularly in developing countries, persist,” the EDB notes.