Interest rates on new developing country borrowing increased by an average of 2.2 percentage points over the course of 2018. Yields on low- and lower-middle income country debt, calculated by Jubilee Debt Campaign, increased by 7 times more than borrowing for the US government over the course of the year.
Yields measure the likely interest rate for governments on new loans. There are 25 low- and lower-middle income country governments with publicly traded international bonds, and so yields. Across these 25, the average yield has increased from 5.8% in January 2018 to 8% in December. In contrast, yields on 10-year US government debt have increased from 2.4% in January 2018 to 2.7%, an increase of 0.3 percentage points.
Commodity prices have also generally fallen over 2018. Commodities are the main exports for many impoverished countries so a key determinant of income from abroad which is needed to pay international debts. The Bloomberg commodity index fell 10% over 2018 and is now at the lowest level since April 2016. In the last year the copper price has fallen by 20%, coffee by 22% and zinc by 26%.
Tim Jones, Economist at the Jubilee Debt Campaign said:
“Borrowing costs for impoverished country governments continue to rise, while commodity prices are falling again. Urgent action is needed to prevent this turning into a full-blown debt crisis. This includes rules to make all loans transparent to help ensure when money is borrowed, it is spent well. And in response to debt crises the IMF should require debt restructurings, rather than bailing out reckless lenders.”
Within low- and lower-middle income countries, yields have increased by more for African countries, by 2.5 percentage points, and now average 8.6%. In contrast, in Asia they have risen by 1.3 percentage points, and now average 6.6%.
Bonds make-up 23% of the external debt of low and lower-middle income country governments. A further 30% of the debt is owed in other ways to private lenders. Yields are a guide to the interest rate on all forms of private lending. 25% of debt is owed to multilateral institutions such as the World Bank, and 22% to other governments.
Currencies have also tended to fall against the dollar in 2018. External debt tends to be owed in dollars or other foreign currencies, so exchange rate falls push up the real value of both debt and interest payments. The largest falls have been the Angolan kwanza (-46%), Pakistani rupee (-21%), and Tunisian dinar and Zambian kwacha (both -16%). The average currency fall across the 25 countries is -8%.
The countries and yields are in the table below. All yields are from cbonds.com Exchange rates are from xe.com
| Country | Maturity of bond | Yield start January 2018 | Yield end December 2018 | Change in yield | Region | Change in exchange rate to the dollar |
| Angola | 7 years | 7% | 8.7% | +1.7% | Africa | -46% |
| Bolivia | 10 years | 5% | 6.7% | +1.7% | Latin America | 0% |
| Cameroon | 7 years | 7.1% | 9% | +1.9% | Africa | -4% |
| Congo, Rep. | 11 years | 8.7% | 11.5% | +2.8% | Africa | -4% |
| Cote d’Ivoire | 10 years | 5.6% | 8.1% | +2.5% | Africa | -4% |
| Egypt | 10 years | 6.1% | 8.4% | +2.3% | Africa | -1% |
| Ethiopia | 6 years | 5.8% | 7.5% | +1.7% | Africa | -2% |
| Ghana | 8 years | 6.2% | 8.9% | +2.7% | Africa | -9% |
| Honduras | 8 years | 5.2% | 6.5% | +1.3% | Latin America | -3% |
| Indonesia | 9 years | 3.6% | 4.5% | +0.9% | Asia | -6% |
| Kenya | 6 years | 5.7% | 8.2% | +2.5% | Africa | +1% |
| Mongolia | 5 years | 5.8% | 7.1% | +1.3% | Asia | -8% |
| Morocco | 4 years | 3.1% | 4.2% | +1.1% | Africa | -3% |
| Namibia | 7 years | 5% | 7.1% | +2.1% | Africa | -13% |
| Nigeria | 9 years | 6% | 8.4% | +2.4% | Africa | -1% |
| Pakistan | 9 years | 6.9% | 8.5% | +1.6% | Asia | -21% |
| Philippines | 11 years | 3.6% | 4.2% | +0.6% | Asia | -6% |
| Rwanda | 4 years | 5.6% | 6.9% | +1.3% | Africa | -6% |
| Senegal | 14 years | 5.7% | 8% | +2.3% | Africa | -4% |
| Sri Lanka | 8 years | 5.5% | 7.9% | +2.4% | Asia | -15% |
| Tajikistan | 9 years | 7.9% | 9.5% | +1.6% | Asia | -6% |
| Tunisia | 9 years | 6.8% | 9.2% | +2.4% | Africa | -16% |
| Ukraine | 9 years | 7.4% | 10.6% | +3.2% | Europe | +1% |
| Vietnam | 6 years | 3.7% | 4.6% | +0.9% | Asia | -2% |
| Zambia | 9 years | 7.1% | 14.8% | +7.7% | Africa | -16% |
| Average | 5.8% | 8% | +2.2% | -8% | ||
| Average Africa | 6.1% | 8.6% | +2.5% | |||
| Average Asia | 5.3% | 6.6% | +1.3% |
This does not include Mozambique, where the one bond is in default, and Papua New Guinea, where its first bond was issued in 2018, so there was no yield in January 2018.