Nigeria Emerges as Third-Largest Debtor to World Bank’s IDA
Nigeria has ascended to the position of the third-largest debtor to the World Bank’s International Development Association (IDA) as of June 30, 2024, following a notable increase in its borrowing from the institution. This information is highlighted in a recent financial statement dated June 30, 2024.
The IDA, a crucial entity within the World Bank framework, extends concessional loans and grants aimed at supporting the world’s poorest nations. These financial instruments, characterized by low interest rates and lengthy repayment terms, are intended to foster economic growth, mitigate inequalities, and enhance living conditions in developing countries.
Recent financial disclosures from the World Bank indicate that Nigeria’s debt exposure to the IDA surged by 14.4%, escalating from $14.3 billion in fiscal year 2023 to $16.5 billion in fiscal year 2024. This $2.2 billion increase marks Nigeria’s debut among the top three IDA debtors, a notable rise from fourth place in 2023.
During the fiscal year spanning July 2023 to June 2024, Nigeria secured a minimum of $2.2 billion in new loans from the IDA under the current administration. It is important to note that this borrowing does not encompass any outstanding loans from the World Bank’s International Bank for Reconstruction and Development, which operates independently from the IDA.
Currently, Bangladesh leads as the largest IDA debtor, with its exposure rising from $19.3 billion in 2023 to $20.5 billion in 2024. Pakistan retains the second position with a consistent debt exposure of $17.9 billion. India, which previously ranked third with $17.9 billion in 2023, experienced a decline to $15.9 billion in 2024, allowing Nigeria to overtake it.
Further notable IDA borrowers include Ethiopia, whose debt exposure grew from $11.6 billion in 2023 to $12.2 billion in 2024, alongside Kenya and Vietnam, both maintaining an exposure of $12.0 billion this year. Collectively, these nations, along with Tanzania, Ghana, and Uganda, represent the top ten IDA debtors, accounting for 63% of the IDA’s total exposure as of June 30, 2024.
In related financial news, the Central Bank of Nigeria’s international payment portal has disclosed that the Tinubu administration allocated $5.39 billion towards debt servicing from a total of $9.1 billion in international payments made between June 2023 and July 2024. This expenditure comprises 59% of the total international payments during this timeframe, highlighting concerns regarding the sustainability of Nigeria’s debt profile. The peak debt servicing payment occurred in May 2024, amounting to $854.36 million, while the lowest was noted in June 2024 at $50.82 million.
Furthermore, the total internal payments made by the Central Bank of Nigeria for international obligations during the same period showed a marked increase, with the highest payment recorded in May 2024 at $1.24 billion.
