Nigeria lists top 5 debtors’ – World Bank

World Bank Group

FIRS

World Bank financial reports have revealed that Nigeria is now ranked fourth among the world’s largest debtors.

According to the World Bank’s audited financial statements for fiscal year 2022 recently released for the International Development Association (IDA), the African giant now has a stock of IDB debt of $13 billion as of June 30, 2022.

This indicates that on the IDB’s list of top 10 borrowers, Nigeria was ranked fifth with $11.7 billion in outstanding IDA debt as of June 30, 2021.

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The International Financial Institution revealed in its audited financial statements that Nigeria had accrued about $1.3 billion in IDA debt in one fiscal year, with the country taking Vietnam’s fourth debtor position.

This debt is different from the outstanding loan of $486 million from the World Bank for reconstruction and development.

The other top five countries on the list would have slightly reduced their outstanding debt with IDA, with the exception of Nigeria.

The report showed that India, which is still first on the list, reduced its stock of IDA debt by $22 billion in the previous fiscal year to $19.7 billion, followed by Bangladesh by 18. .1 billion dollars to 18 billion dollars.

It is followed by Pakistan, which reduced its debt from $16.4 billion to $15.8 billion, and finally Vietnam, which fell to fifth position, from $14.1 billion to $12.9 billion. of dollars.

Nigeria has the highest IDA debt in Africa, as the top three IDA borrowers (India, Bangladesh and Pakistan) are from Asia. The World Bank recently revealed that Nigeria’s debt, which can be considered sustainable for now, is vulnerable and costly.

The bank said: “Nigeria’s debt remains sustainable, albeit vulnerable and costly, particularly given the large and growing funding from the Central Bank of Nigeria.”

The Washington-based global financial institution has pointed out that Nigeria’s debt also risks becoming unsustainable in the event of macro-fiscal shocks.

The bank further expressed concern over the cost of servicing the country’s debt, which it said has disrupted public investment and essential spending on service delivery.

PwC’s Fiscal Policy Partner and Africa Tax Leader, Mr. Taiwo Oyedele, expressed his agreement with the World Bank on the high cost of servicing debt.

He said, “I agree with the World Bank. Although the debt-to-GDP ratio is not too high, if you think about the ratio of the cost of servicing debt to revenue, it is already over 70%. That’s when you know it’s expensive.

“Nigeria is borrowing at double digits, and even when we are borrowing in dollars the rates are very high and then you devalue the naira and the cost of servicing the naira debt goes up because it is a debt dominated by the dollar.

“Put all of this together, and you can easily tell yourself that even though our debt-to-GDP ratio is very low, our cost of borrowing is unsustainable because it’s very high, and therefore, makes it very expensive.”

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