Nigeria’s Debt To World Bank’s IDA Hits $17 Billion

Nigeria’s debt to the World Bank’s International Development Association (IDA) has reached $17.1 billion since September 30, 2024.

Naijaonpoint reports that the World Bank’s most recent financial statements for the fiscal year ending September 2024 indicate that Nigeria’s debt to the IDA rose by $600 million over a three-month period, up from $16.5 billion reported in June 2024.

Due to these figures, Nigeria has maintained its status as the third-largest debtor to the IDA.

A recent report by The PUNCH highlighted a 14.4 per cent increase in debt from the $14.3 billion recorded in June 2023 to the June 2024 figure.

During the fiscal year spanning July 2023 to June 2024, Nigeria received an additional $2.2 billion in loans.

Notably, Nigeria entered the top three IDA borrowers in June 2024, advancing from its previous fourth position in 2023.

To date, Nigeria has sustained its position as the third-largest debtor, having received a total of $2.8 billion from the IDA during the administration of Bola Tinubu.

Bangladesh and Pakistan hold the first and second positions, with debt exposures of $21 billion and $18.5 billion, respectively.

India ranks fourth with a debt of $15.9 billion, while Ethiopia’s debt stands at $13.1 billion.

Other significant borrowers include Kenya ($12.4 billion), Tanzania ($12.2 billion), and Vietnam ($12.2 billion).

At the lower end of the spectrum, Ghana and Uganda owe $7 billion and $5 billion, respectively.

These ten nations collectively account for 63 per cent of the IDA’s total exposure, underscoring their substantial dependence on concessional financing.

The IDA has established its Single Borrower Limit at $47.5 billion for FY2025, which constitutes 25 per cent of its total equity of $190.3 billion as of June 30, 2024.

While Nigeria’s debt remains considerable, it is still within the SBL threshold, which the World Bank currently deems non-restrictive.

The financial statements document read, “As of September 30, 2024, the ten countries with the highest exposures accounted for 63 per cent of IDA’s total exposure. Monitoring these exposures relative to the SBL requires consideration of the repayment profiles of existing loans, as well as disbursement profiles and projected new loans and guarantees.”

Naijaonpoint reports that Nigeria’s loans from the International Development Association (IDA), characterized by low interest rates and extended repayment periods, stand in contrast to its commitments to the International Bank for Reconstruction and Development (IBRD) of the World Bank, which offers financing at prevailing market rates.

These concessional loans have become an essential component of Nigeria’s funding strategy, especially under President Bola Tinubu’s administration, which is tasked with managing inherited debts while pursuing various reforms.

Meanwhile, the Federal Government had recently allocated $3.58 billion to service its foreign debt during the first nine months of 2024, marking a 39.77 per cent increase compared to the $2.56 billion spent in the same timeframe in 2023.

This information was derived from the Central Bank of Nigeria’s international payment statistics.

The notable increase in external debt service payments underscores the growing strain on Nigeria’s fiscal balance amidst ongoing economic difficulties.