WASHINGTON, June 20, 2025-More developing economies are turning to off-budget and more complex borrowing arrangements in response to a tighter financing environment, making it harder to fully assess public debt exposures, according to a new World Bank report on debt transparency.
To address these issues, the report recommends a fundamental shift in how debtor and creditor countries report and disclose debt, including broader coverage of what is reported and deeper, loan-by-loan disclosures.
The report, Radical Debt Transparency, shows that while the proportion of low-income countries publishing some debt data has grown from below 60% to more than 75% since 2020, only 25% disclose loan-level information on newly contracted debt. The rise of complex and often opaque financing arrangements such as private placements, central bank swaps, and collateralized transactions has further complicated reporting.
"Recent cases of unreported debt have highlighted the vicious cycle that a lack of transparency can set off," said World Bank's Senior Managing Director Axel van Trotsenburg. "When hidden debt surfaces, financing dries up and terms worsen. Countries turn to opaque, collateralized deals. Radical debt transparency, which makes timely and reliable information accessible, is fundamental to break the cycle."
According to the report, debt issued domestically is also increasing, but disclosure standards are inadequate. Countries are also turning to "silent" partial and confidential debt restructurings with select creditors, depriving markets of critical information.
The report recommends debtors and creditors undertake urgent steps to improve transparency practices. These include legal and regulatory reforms mandating transparency in loan contracts and disclosure of lending terms, full participation by creditor countries in comprehensive debt reconciliation processes, more regular audits and national better oversight, and the public release of debt restructuring terms once agreements are finalized.
"Debt transparency is not just a technical issue-it's a strategic public policy that that builds trust, reduces borrowing costs, and attracts investment," said Pablo Saavedra, World Bank's Vice President for Prosperity. "Radical debt transparency not only supports debt sustainability but also unlocks private sector investment to drive job creation."
At the heart of World Bank efforts to promote debt transparency are its technical assistance program, which promotes country-specific transparency reforms, and the global Debtor Reporting System, the single most important source of verifiable data on the external debt of low- and middle-income countries. Efforts are underway to expand the System to include domestic debts and further enhance data quality.
