The World Bank recently released its “International Debt Report 2025” (IDR 2025) shedding light on the trends in external debt and financial flows (debt and equity) across 119 low and middle-income countries (LMICs) during the year 2024. In figures, the report unveiled that external debt stocks at LMICs increased by 1.14% in 2024 to around $8.94 trillion, up from $8.84 trillion in 2023. Delving further into details, the report revealed that short-term external debt stock was the fastest growing component in 2024, rising by 2.53% to around $2.39 trillion (up from $2.34 trillion in 2023). On the other hand, the report noted that long-term external debt stock rose by a mere 0.83% to attain $6.17 trillion compared to $6.12 trillion a year earlier. The report noted that some LMICs chose to restructure or renegotiate their existing debt in order to decrease elevated debt levels in an attempt to reduce fiscal pressures and ameliorate long-term sustainability. The report added that LMIC governments have increased their reliance on domestic borrowing in 2024 in order to meet their critical financing needs instead of incurring additional external debt financing. More specifically, the report commented that the shift from external to domestic borrowing prompted concerned LMIC governments to take a more cautious approach to borrowing from external sources on the short-term (especially given that the current period is characterized by high interest rates, elevated debt levels, weak credit ratings, and rising trade uncertainties) while the steady development of domestic capital markets allowed several LMICs to identify and tap internal sources to meet their financing needs on the long-term.

On the local front, the World Bank report revealed that net debt inflows to Lebanon stood at a negative $636 million in 2024, in comparison with negative $2.61 billion in 2023. This can be attributed to the significant decrease in long-term debt flows from negative $2.42 billion in 2023 to negative $779 million in 2024, which outweighed the increase in short-term debt flows from negative $189 million to positive $142 million in 2024. Lebanon’s external debt stock increased by 1.60% in 2024 to $67.39 billion (up from $66.33 billion in 2023), mainly driven by the 11.01% rise in short-term external debt to $19.05 billion up from $17.16 billion in 2023. As far as net equity inflows are concerned, FDI inflows to Lebanon widened during the past year, reaching $1,843 million compared to $665 million in 2023. According to the World Bank report, Lebanon’s external debt to exports ratio rose from 525.2% in 2023 to 570.3% in 2024, with the ratio of reserves to external debt concurrently increasing from 41.7% to 49.5%.