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Sovereign debt defaults soar as governments feel pinch of higher rates, data show

The amount of sovereign debt in default rose by 35 per cent in 2022 as interest rates climbed, reaching US$558 billion and representing 0.6 per cent of public debt worldwide, according to data gathered by the Bank of Canada and Bank of England.


Tighter financing conditions hit hardest in emerging markets and heavily indebted poor countries, as defined by the central banks.


The amount of debt in default grew even though the number of sovereigns in default shrunk to 84 from 99.


“Debt in default jumped 52 per cent for HIPCs (heavily-indebted poor countries) and 49 per cent for emerging/frontier market sovereigns, but by just two per cent for advanced-economy sovereigns,” the Bank of Canada said in a July 31 report.


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