Nigeria Climbs to Third-Largest World Bank Debtor: Owes a Staggering $16.5 Billion

Nigeria Emerges as World Bank’s IDA Third-Largest Debtor, Owes $16.5 Billion

Nigeria has ascended to the position of the third-largest debtor to the World Bank’s International Development Association (IDA), with its debt ballooning to $16.5 billion as of June 30, 2024. This significant increase in borrowing, as reported by PUNCH Newspaper, marks a pivotal moment in Nigeria’s financial relationship with the global institution.

The IDA, a branch of the World Bank, extends concessional loans and grants to the world’s poorest countries, offering low-interest rates and extended repayment terms. These loans aim to stimulate economic growth, reduce inequality, and improve living standards in developing nations.

In the latest financial statements from the World Bank, Nigeria’s debt to the IDA surged by 14.4%, rising from $14.3 billion in the fiscal year 2023 to $16.5 billion in 2024. This $2.2 billion increase has catapulted Nigeria into the top three IDA debtors for the first time, surpassing its previous rank as the fourth-largest borrower in 2023.

Between July 2023 and June 2024, under the administration of President Bola Tinubu, Nigeria secured an additional $2.2 billion in loans from the IDA. It’s crucial to note that this borrowing is separate from any existing loans Nigeria has with the World Bank’s International Bank for Reconstruction and Development (IBRD), which operates independently of the IDA.

Globally, Bangladesh remains the largest IDA debtor, with its exposure increasing from $19.3 billion in 2023 to $20.5 billion in 2024. Pakistan follows as the second-largest debtor, with a stable exposure of $17.9 billion. India, previously the third-largest borrower with $17.9 billion in 2023, saw its IDA exposure decrease to $15.9 billion in 2024, allowing Nigeria to overtake it.

Other significant IDA borrowers include Ethiopia, which saw its exposure grow from $11.6 billion in 2023 to $12.2 billion in 2024. Kenya and Vietnam each hold $12.0 billion in exposure this year, while Tanzania, Ghana, and Uganda complete the top ten IDA debtors, collectively accounting for 63% of the IDA’s total exposure as of June 30, 2024.

In parallel, data from the Central Bank of Nigeria’s international payment portal reveals that the Tinubu administration spent $5.39 billion on debt servicing out of a total of $9.1 billion in international payments made between June 2023 and July 2024. This equates to 59% of the total international payments during this period.

The growing allocation towards debt servicing highlights increasing concerns about the sustainability of Nigeria’s debt profile. May 2024 saw the highest debt servicing payment, amounting to $854.36 million, while the lowest payment occurred in June 2024, totaling $50.82 million.

Moreover, the total international payments made by the Central Bank of Nigeria for international obligations during this period reflected a steady increase, with the highest payment recorded in May 2024 at $1.24 billion. This trend underscores the financial pressures Nigeria faces as it grapples with its mounting debt obligations on the global stage.