WASHINGTON, DC – Like the United States and other rich countries, developing countries had little choice but to borrow and spend heavily to deal with COVID-19. Poor countries’ already-high debt levels ballooned to a 50-year peak as a result. Then came the Russian invasion of Ukraine, which caused record increases in food, fuel, and fertilizer prices. And now that rising inflation has prompted interest-rate increases in advanced economies, developing countries’ currencies are declining in value, adding to their debt woes.

In March, the World Bank estimated that a dozen developing countries could default on their debt over the next 12 months. The warning signs are everywhere. Investors have pulled $50 billion from emerging-market bond funds this year, and the debt of nearly one-third of these countries is trading at distressed levels. Without market access, many governments will struggle to roll over their external debt. According to our own calculations, low-income countries alone face nearly $15 billion in Eurobond rollovers over the next three years.

This year’s massive global food crisis has made matters worse. A spate of sovereign-debt crises could trigger humanitarian emergencies in the developing world, as governments run out of foreign-exchange reserves with which to fund basic food imports, as happened in Sri Lanka.