Nigeria’s rising debt profile became more worrisome as the country has found itself in the top half of the World Bank’s top 10 International Development Association (IDA) borrowers’ list.
The World Bank Fiscal Year 2021 audited financial statements, known as the IDA financial statement, showed that Nigeria was rated fifth on the list with $11.7bn IDA debt stock as of June 30, 2021.
More worrisome, the newly released World Bank Fiscal Year 2022 audited financial statements for IDA showed that Nigeria has now moved to the fourth position on the list, with $13bn IDA debt stock as of June 30, 2022.
This shows that Nigeria accumulated about $1.3bn in IDA debt within a fiscal year, with the country taking over the fourth top debtor position from Vietnam.
This debt is different from the outstanding loan of $486m from the World Bank’s International Bank for Reconstruction and Development.
The top five countries on the list slightly reduced their IDA debt stock except for Nigeria.
India, which is still the first on the list reduced its IDA debt stock from $22bn in the previous fiscal year to $19.7bn, followed by Bangladesh from $18.1bn to $18bn.
It is followed by Pakistan which cut its debt from $16.4bn to $15.8bn, and lastly, Vietnam, which went down the list to the fifth position, from $14.1bn to $12.9bn.
Nigeria has the highest IDA debt in Africa, as the top three IDA borrowers (India, Bangladesh and Pakistan) are from Asia. The World Bank disclosed recently that Nigeria’s debt, which may be considered sustainable for now, is vulnerable and costly.
The bank said, “Nigeria’s debt remains sustainable, albeit vulnerable and costly, especially due to large and growing financing from the Central Bank of Nigeria.”
However, the Washington-based global financial institution added that the country’s debt was also at risk of becoming unsustainable in the event of macro-fiscal shocks.
The bank further expressed concerns over the nation’s cost of debt servicing, which according to it, disrupted public investments and critical service delivery spending.
It would be recalled that economists have also raised concerns over the rising debt profile of the Federal Government.
It would also be recalled that Nigeria’s debt servicing surpasses revenue by N310bn after the FG released a 4-month fiscal report.
The cost of servicing debt surpassed the federal government’s retained revenue by N310 billion in the first four months of 2022. The federal government said this in its 2022 fiscal performance report for four months released on Thursday
The Fiscal Policy Partner and Africa Tax Leader of PwC, Mr Taiwo Oyedele, had at different fora raised alarm about the country’s rising debt profile while agreeing with the World Bank on the high cost of debt servicing.
