WASHINGTON, D.C. — It was a bold idea, encapsulated in a snappy slogan: 'From billions to trillions.' A decade ago, when private capital was sloshing into developing economies, governments and development institutions saw an opportunity to turbocharge progress on poverty reduction and other development goals. 'The good news is that, globally, there are ample savings, amounting to $17 trillion, and liquidity is at historical highs,' read a key strategy document of the time.
In the absence of a predictable global system for restructuring debt, most countries facing distress opted to tough it out rather than default and risk being cut off indefinitely from global capital markets. In some cases, new financing arriving from the World Bank promptly went back out the door to repay private creditors.In 2023, developing countries spent a record $1.4 trillion — nearly 4 percent of their gross national income — just to service their debt.