The World Bank has issued a strong call for radical transparency in national debt reporting, aimed at preventing future financial crises in developing countries. A report published on 20 June 2025 highlights growing use of complex borrowing tools such as off‑budget swaps, private placements and collateralised debt that are often excluded from official records.
While more than three‑quarters of low‑income nations now report some debt data, only a quarter share granular, loan‑by‑loan details. This lack of clarity can catch investors and global lenders off guard when undisclosed liabilities emerge, leading to higher borrowing costs and strained terms. World Bank senior managing director Axel van Trotsenburg summed it up: “When hidden debt surfaces, financing dries up and terms worsen”.
To address the problem, the report urges governments to adopt new laws and audit regimes that enforce mandatory disclosure of loan contracts and restructuring agreements. It also recommends participation by all creditors in reconciliation processes and suggests enhanced tools to identify misreporting. Pablo Saavedra, the World Bank’s vice‑president for prosperity, described transparent debt practices as a means to build trust, reduce borrowing costs and unlock private investment for job creation.
For banks, insurers and other financial institutions operating in emerging markets, the push for deeper debt transparency marks a pivotal shift. Improved reporting should reduce uncertainty over sovereign risk, making credit analysis more reliable and pricing of sovereign bonds more accurate. Institutions that can access and evaluate full loan‑level data will gain a competitive edge in lending and risk management.
However, achieving these reforms involves political and technical hurdles. Stronger legal frameworks and enhanced oversight are needed, along with creditor cooperation. The report acknowledges these challenges but argues that clear debt data is critical to ensuring resilient financial systems and sustainable development .
