Guatemala, Argentina, Paraguay, and Colombia led a regional surge in external borrowing during 2025, pushing emerging market foreign obligations to a global record of US$9.4 trillion, according to data from the World Bank’s International Debt Report 2026 cited by Bloomberg Línea.
External Debt Grows as Private Creditors Return to Markets
- Low- and middle-income country external debt grew 5.5% in 2025, marking the sharpest annual expansion since 2021 as private creditors returned to international markets.
- Guatemala posted the highest percentage increase in Latin America at 18.2%, followed by Argentina at 16.1%, Paraguay at 14.5%, and Colombia at 13.8%.
- Despite leading in relative growth rates, smaller economies were dwarfed in absolute dollar terms by regional heavyweights Brazil and Mexico.
The Anatomy of Latin America’s External Debt Expansion
The 5.5% expansion across low- and middle-income economies coincided with a broad revival in private creditor participation. Public entities ramped up bond issuances by 35% to reach US$251 billion, the highest level recorded in five years. Bloomberg Línea noted that external obligations encompass both public and private debt owed to non-residents, meaning these balances extend well beyond central government liabilities.
Regional disparities defined the 2025 figures. While Brazil and México retained the largest aggregate debt stacks, smaller economies registered much steeper percentage climbs. Guatemala expanded its external obligations by 18.2% to hit US$31.997 billion. Argentina followed closely with a 16.1% increase, bringing its total to US$261.653 billion. Paraguay and Colombia registered growth rates of 14.5% and 13.8%, respectively.
| Country | External Debt (2025) | Annual Variation | Absolute Increase |
|---|---|---|---|
| Guatemala | US$31,997 million | 18.2% | US$4,927 million |
| Argentina | US$261,653 million | 16.1% | US$36,284 million |
| Paraguay | US$34,300 million | 14.5% | US$4,344 million |
| Colombia | US$255,956 million | 13.8% | US$31,039 million |
| Brasil | US$659,803 million | 8.7% | US$52,809 million |
| México | US$645,042 million | 7.9% | US$47,227 million |
Absolute Dollar Growth Versus Percentage Velocity
Re-sorting the data by absolute dollar volumes alters the picture entirely. Brasil added an estimated US$52.809 million in external obligations during the year, while México added US$47.227 million. Together with Argentina and Colombia, these four nations concentrated 83.2% of the US$2.19 trillion accumulated across the 15 analyzed Latin American and Caribbean jurisdictions.
Conversely, only two countries in the regional sample trimmed their foreign exposure. Perú pared its external debt down 0.2% to US$94.270 million, and Haiti reduced its balance by 12.7% to US$827.5 million. Currency depreciation also played a mechanical role in the aggregate metrics. The World Bank reported that dollar depreciation accounted for 28.2% of the increase in public and publicly guaranteed external debt due to the conversion of non-dollar-denominated obligations.
DEVELOPING COUNTRIES' EXTERNAL DEBT HITS RECORD $9.4 TRILLION: A WARNING FOR GLOBAL MARKETS The World Bank's International Debt Report 2026 reveals that external debt across low- and middle-income countries surged 5.5% to a record $9.4 trillion in 2025. But the bigger concern…
Rising Borrowing Costs Strain Sovereign Balance Sheets
Access to international capital improved over the course of 2025, but the price of that liquidity climbed sharply. Fu, a statistician at the World Bank, highlighted that while capital markets reopened, borrowing terms remained punishingly expensive. Economies eligible for financing from the International Development Association faced an average rate of 8.2% on new commitments with private creditors, marking the highest average borrowing cost since 1989.
Total debt service for low- and middle-income countries ticked up 1.9% to reach US$1.4 trillion in 2025, marking the fifth annual increase. Between 2022 and 2025, these nations paid out US$436,000 million more in principal and interest than they pulled in through new financing.
Colombia registered a debt-to-exports ratio of 315%, meaning its external obligations exceeded three times its annual export revenue. El Salvador reported the highest debt-to-gross national income ratio at 82% alongside a debt service-to-exports ratio of 79%, signaling acute pressure on foreign exchange earnings.
