Nigeria remains the third-largest debtor to the World Bank’s International Development Association (IDA), with debt exposure reaching $17.1 billion as of September 30, 2024. This marks a $600 million increase from $16.5 billion in June 2024, according to the World Bank’s latest financial report.
Key Highlights
– Growth in Debt: Nigeria’s debt to the IDA increased by $2.8 billion under President Bola Tinubu’s administration, with $2.2 billion borrowed in the 2023/2024 fiscal year.
– Global Comparison: Bangladesh and Pakistan top the IDA debtor list, owing $21 billion and $18.5 billion, respectively. India follows Nigeria with $15.9 billion in debt.
– Debt Servicing: In the first nine months of 2024, Nigeria spent $3.58 billion servicing external debt, a 39.77% increase compared to the $2.56 billion spent during the same period in 2023.
Implications
Despite its significant debt, Nigeria remains within the IDA’s Single Borrower Limit (SBL) of $47.5 billion, ensuring access to concessional loans with favorable terms. However, rising external debt servicing costs underscore the mounting fiscal pressure amidst ongoing economic reforms.
The IDA loans, offering low interest rates and extended repayment terms, remain a crucial part of Nigeria’s strategy to manage inherited debts and finance development projects.
This development raises concerns among economists about Nigeria’s growing reliance on external financing and the long-term sustainability of its debt profile.
