Nigeria has emerged as the third-largest debtor to the World Bank’s International Development Association (IDA) as of June 30, 2024, following a significant increase in its borrowing from the global financial institution. This development highlights the growing debt burden Nigeria faces amidst ongoing economic challenges.
The information was disclosed in a financial statement dated June 30, 2024, which was recently made public. The IDA, a vital arm of the World Bank, provides concessional loans and grants to the world’s poorest countries. These loans, characterized by low interest rates and extended repayment periods, aim to foster 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%, rising from $14.3 billion in the fiscal year 2023 to $16.5 billion in the fiscal year 2024. This $2.2 billion increase marks Nigeria’s first appearance among the top three IDA debtors, advancing from its previous position as the fourth-largest borrower in 2023.
During the fiscal year from July 2023 to June 2024, Nigeria secured at least $2.2 billion in new loans from the IDA under the administration of President Bola Tinubu. Notably, this borrowing is separate from Nigeria’s outstanding loans from the World Bank’s International Bank for Reconstruction and Development (IBRD), which operates independently of the IDA.
Bangladesh remains the largest IDA debtor, with its exposure increasing from $19.3 billion in 2023 to $20.5 billion 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 $17.9 billion, saw its IDA exposure decrease to $15.9 billion in 2024, allowing Nigeria to overtake it.
Other significant IDA borrowers include Ethiopia, whose exposure grew from $11.6 billion in 2023 to $12.2 billion in 2024, as well as Kenya and Vietnam, both with $12.0 billion in exposure this year. These nations, alongside Tanzania, Ghana, and Uganda, round out the top ten IDA debtors, collectively accounting for 63% of the IDA’s total exposure as of June 30, 2024.
Meanwhile, the Central Bank of Nigeria’s (CBN) international payment portal has revealed 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 represents 59% of the total international payments during this period.
The data indicates that a significant portion of Nigeria’s international payments has been directed towards debt servicing, raising concerns about the sustainability of the nation’s debt profile. The highest debt servicing payment was made in May 2024, amounting to $854.36 million, while the lowest payment occurred in June 2024, at $50.82 million.
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 $1.24 billion. This rise in debt and the increasing cost of servicing it are likely to continue fueling discussions about the sustainability of Nigeria’s borrowing and the broader implications for its economic future.
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