New Delhi

The developing world is bracing for a tumultuous 2025. Emerging market nations have to deal with the added stress of paying interest on the 29 trillion dollars in debt that was accumulated over the past decade.

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The United Nations reports that a record  54 nations will pay interest that exceeds 10 per cent of their earnings. Some countries, like Nigeria and Pakistan, will pay more than 30 per cent of their revenues on coupon payments alone.

As a result, nations are cutting down on internal investments like roads, schools, and hospitals. This increased risks for investors in developing markets, totalling around 850 billion dollars in debt last year.

Roberto Sifon-Arevalo, global head of sovereign ratings at S&P Global Ratings said, "Interest burdens are massive. There's a lot of muddle through, but there's a tremendous amount of risk."

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The debt risk is something developing markets have to worry about in 2025.

In addition, uncertainty about the Chinese economy, rising geopolitical tensions, and the effects of Donald Trump on US Rates and dollar forecasts all point to a rocky 2025.

Morgan Stanley's data shows that global investors are already pulling their money out of hard-currency em debt, with outflows exceeding 14 billion dollars this year.

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Emerging-market debt over the previous decade has more than doubled to about 29 billion dollars.

As a result, they have large interest payments and bond maturities that must be met or refinanced. In the next two years, approximately 190 billion dollars in foreign bond obligations are due.

Em debt investors were hit hard by a string of defaults during the pandemic. The prospect of an additional wave of failures.

(With inputs from the agencies)