Nigeria becomes World Bank’s IDA third-largest debtor, owes $16.5bn

Nigeria is the third-largest debtor to the World Bank’s International Development Association as of June 30, 2024, following a significant increase in its borrowing from the institution.

A financial statement dated June 30 2024 but recently made public and obtained by our correspondent on Tuesday disclosed this.

The IDA, a key arm of the World Bank, provides concessional loans and grants to the world’s poorest countries. These loans, characterised by low interest rates and extended repayment periods, are designed to promote economic growth, reduce inequalities, and improve living conditions in developing nations.

According to the World Bank’s latest financial statements, Nigeria’s exposure to the IDA surged by 14.4 per cent, rising from $14.3bn in fiscal year 2023 to $16.5bn in fiscal year 2024.

This $2.2bn increase marks Nigeria’s first appearance among the top three IDA debtors, up from its previous position as the fourth-largest borrower in 2023.

During the fiscal year from July 2023 to June 2024, Nigeria received at least $2.2bn in new loans from the IDA under the administration of President Bola Tinubu.

This borrowing does not include any outstanding loans from the World Bank’s International Bank for Reconstruction and Development, which is separate from the IDA.

Bangladesh remains the largest IDA debtor, with its exposure increasing from $19.3bn in 2023 to $20.5bn in 2024. Pakistan continues to hold the second position with a stable exposure of $17.9 billion.

India, which was the third-largest borrower in 2023 with $17.9bn, saw its IDA exposure decrease to $15.9bn in 2024, allowing Nigeria to overtake it.

Other significant IDA borrowers include Ethiopia, whose exposure grew from $11.6bn in 2023 to $12.2bn in 2024, and Kenya and Vietnam, both with $12.0bn in exposure this year.

These nations, along with Tanzania, Ghana, and Uganda, round out the top ten IDA debtors, collectively accounting for 63 per cent of the IDA’s total exposure as of June 30, 2024.

Meanwhile, the Central Bank of Nigeria’s international payment portal has revealed that the Tinubu administration spent $5.39bn on debt servicing out of a total of $9.1bn in international payments made between June 2023 and July 2024. This represents 59 per cent of the total international payments made during this period.

The data indicates that a significant portion of the country’s international payments has been dedicated to debt servicing, raising concerns about the sustainability of Nigeria’s debt profile. The highest debt servicing payment was made in May 2024, amounting to $854.36m, while the lowest payment occurred in June 2024, at $50.82m.

The total internal payments made by the CBN for international obligations during the same period showed a steady increase, with the highest payment recorded in May 2024 at $1.24bn.