Nigeria has ascended to become the third-largest debtor to the World Bank’s International Development Association (IDA) as of June 30, 2024, highlighting the country’s increasing reliance on international financing amidst its economic challenges.
Key Points:
Debt Increase: Nigeria’s exposure to the IDA surged by 14.4%, rising from $14.3 billion in FY2023 to $16.5 billion in FY2024, a $2.2 billion increase.
Global Ranking: This places Nigeria among the top three IDA debtors, surpassing its previous rank as the fourth-largest borrower in 2023.
Recent Funding: Under President Bola Tinubu’s administration, Nigeria received at least $2.2 billion from the World Bank in FY2024.
Comparative Analysis of Other IDA Debtors
Nigeria’s rise in the IDA debtor ranks is part of broader global borrowing trends:
Bangladesh: Remains the largest IDA debtor, with its exposure increasing from $19.3 billion in 2023 to $20.5 billion in 2024.
Pakistan: Maintains its second place standing with a stable exposure of $17.9 billion.
India: Previously held the third spot but decreased to $15.9 billion in 2024, allowing Nigeria to surpass it.
Other Significant Borrowers: Ethiopia, Kenya, Vietnam, Tanzania, Ghana, and Uganda also feature among the top ten IDA debtors, collectively accounting for 63% of the IDA’s total exposure as of June 30, 2024.
Implications for Nigeria’s Public Debt
This development has significant implications for Nigeria’s economic sustainability:
Growing Public Debt: The increasing reliance on international loans, particularly from the World Bank’s concessional arm, raises concerns about Nigeria’s long-term economic sustainability and its ability to manage and service this mounting debt.
Economic Objectives: The IDA loans, designed to foster economic growth, reduce inequalities, and improve living conditions, now cast a shadow over these objectives due to Nigeria’s ballooning debt profile.
Debt Servicing Costs: Rising external debt servicing costs are a major concern, given the concessional nature of IDA loans.
Recent Loan Disbursements and Future Outlook
Total Loans Secured: Nigeria has secured a total of $4.95 billion in loans from the World Bank under President Tinubu’s administration, although only about 16% of these funds have been received so far.
Current Debt: As of March 31, 2024, Nigeria owed the World Bank a total of $15.59 billion. With the possibility of an additional $2 billion in loans being approved this year, Nigeria’s public debt is poised to swell further.
Debt Management: The urgency for effective debt management strategies has heightened, despite the concessional terms of IDA loans.
The increasing debt burden underscores the need for careful financial planning and management to ensure Nigeria’s economic stability and growth.
