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Lagos, Nigeria. Africa's largest economy has been tipped into recession as a result of the crash in oil prices.

The annual report from the UN’s Conference on Trade and Development (UNCTAD) also highlighted that in recent years, developing nations have deepened their financial integration with the rest of the world, meaning any crisis could impact the global financial system.

Meanwhile, the benefits developing nations reaped from debt relief in the early years of the century, cheap credit, and financial integration are “fast evaporating”, it warned.

“If the global economy were to slow down more sharply, a significant share of developing country debt incurred since 2008 could become unpayable and exert considerable pressure on the financial system,” it warned.

The report highlighted that developing country external debt stocks have risen from $2.1tn in 2000 to $6.8tn in 2015 as easy access to cheap credit in boom times led to growing debt levels in the developing world.

Overall debt levels rose by over $31tn, with the debt-to-GDP ratios in many developing countries reaching over 120%, which increases to over 200% in some emerging economies.

Corporate debt and sovereign bond issuance have both also ballooned, it added, noting that “alarm bells have been ringing for some time”.

As commodity prices increased in the wake of the 2007-8 financial crisis, many developing nations began to borrow heavily.

But today, amid a collapse in prices that has left many developing economies either in recession or on the brink of a contraction, countries are struggling to repay what they owe.

“Only a couple of years ago, the amount of debt that low-income and developing economies could have sold to eager investors seemed almost limitless.

“But prolonged commodity price shock, steep currency depreciations and worsening growth prospects in a deteriorating global economic environment have quickly driven up borrowing costs and debt-to-GDP ratios,” the report said.

An interest rise from the US Federal Reserve would serve to exacerbate the situation, it added.

What has seemed like sound debt burdens had rapidly transformed into unsustainable debt. The report noted that several countries including Ghana, Kenya, Mozambique, Nigeria, Zambia and Zimbabwe have had to turn to institutions like the IMF and the World Bank for financial assistance.

The international community will have to “prepare itself for managing debt work-outs in a faster, fairer and more orderly manner than it has done so far”, the report said.