The World Bank has warned the largest and fastest rise in global debt in half a century could lead to another financial crisis as the world economy slows.

Key points: The World Bank says debt increased at a faster annual pace from 2010 to 2018 than during the Latin American debt crisis of the 1980s

The World Bank says debt increased at a faster annual pace from 2010 to 2018 than during the Latin American debt crisis of the 1980s World Bank president David Malpass has called on governments to make their countries less vulnerable to shocks

World Bank president David Malpass has called on governments to make their countries less vulnerable to shocks The report found roughly half of the debt surges in emerging and developing countries since 1970 ended in a financial crisis

The 'Global Waves of Debt' report looked at the four major episodes of debt increases that have occurred in more than 100 countries since 1970 — the Latin American debt crisis of the 1980s, the Asian financial crisis of the late 1990s and the global financial crisis from 2007 to 2009.

The bank said during the fourth wave, from 2010 to 2018, the debt to GDP ratio of developing countries has risen by more than half to 168 per cent.

That was a faster increase on an annual basis than during the Latin American debt crisis.

Problematically, the rise in debt has been across both private companies and governments across the world, amplifying the risks if there is another global financial crisis.

China accounted for the bulk of the increase, with its debt-to-GDP ratio rising by nearly three-quarters to 255 per cent since 2010, now totalling more than $US20 trillion.

However, most emerging economies saw their debt rise over the eight years.

Build up of private and public debt

The report said the latest wave of debt was more challenging than the previous three waves because of the build up of both private and public debt, new types of creditors including foreign investors and the big rise in borrowing, which was global and not limited to one or two regions.

Both private and public debt have increased in this latest debt build up. ( Supplied: World Bank )

Poorer countries have also increasingly borrowed from non-traditional lenders such as China, which offer less favourable loan conditions, including higher interest rates and requiring stakes in projects as collateral.

World Bank president David Malpass, a former US Treasury Department official, said governments needed to strengthen their economic policies to make their countries less vulnerable to financial shocks.

"The size, speed, and breadth of the latest debt wave should concern us all.

"It underscores why debt management and transparency need to be top priorities for policymakers — so they can increase growth and investment and ensure that the debt they take on contributes to better development outcomes for the people," he said.

Pressure on governments to prevent future crisis

The report said low interest rates globally reduced the risk of a crisis for the time being.

However, the World Bank's vice president for equitable growth, finance and institutions Ceyla Pazarbasioglu said the dangers were building up.

"History shows that large debt surges often coincide with financial crises in developing countries, at great cost to the population," she said.

The report said that total debt in developed countries remained near the record levels reached in the aftermath of the global financial crisis, at around 265 per cent of GDP in 2018, or $US130 trillion.

"While government debt has risen, to a high of 104 per cent of GDP ($US50 trillion), private sector debt has fallen slightly amid deleveraging in some sectors. Total debt has fallen since 2010 in two-fifths of advanced economies," the report said.

The World Bank and the International Monetary Fund have been warning for some years about the build up of global debt since the GFC.

The new report has upped the pressure on governments to prevent another debt crisis.

It found that of 519 cases of debt surges in 100 emerging and developing countries since 1970 roughly half ended in financial crises.

Mr Malpass called on governments to improve management of their debts to lower borrowing costs and said both governments and creditors needed to be more transparent about loans.

"Emerging and developing economies already are more vulnerable on a variety of fronts than they were ahead of the last crisis," he said.

"75 per cent of them now have budget deficits, their foreign currency denominated corporate debt is significantly higher, and their current account deficits are four times as large as they were in 2007.

"Under these circumstances, a sudden rise in risk premiums could precipitate a financial crisis, as has happened many times in the past."