Nigeria’s debt to the World Bank might rise from $12.72 billion to $21.15 billion as a result of undisbursed loans, which would represent an increase of 66.27 percent.
According to the World Bank’s audited financial accounts for the fiscal year 2022, as of June 30, 2022, the bank has not yet paid around $8.12 billion to Nigeria.
According to a breakdown, the undisbursed loans comprised $514 million from the International Bank for Reconstruction and Development (IBRD) and $7.60 billion from the International Development Association (IDA). These unpaid debts include pledges for loans that have been approved but not yet executed.
Explaining the reason for the yet-to-be-disbursed loans, particularly the signed loan commitments, the bank said that these “loans are not effective and disbursements do not start until the borrowers and/or guarantors take certain actions and furnish documents.”
The IBRD and the IDA, which make up the World Bank, have, over the years, advanced loans to Nigeria. The IBRD lends to governments of middle-income and creditworthy low-income countries, while the IDA provides concessionary loans – called credits – and grants to governments of the poorest countries.
The Debt Management Office(DMO) had disclosed that Nigeria’s debt to the Washington-based bank was $12.72bn as of March 31, 2022. A breakdown showed that Nigeria borrowed $12.23bn from the IDA and $486.10m from the IBRD.
Nigeria owes the World Bank $13.04 billion as of June 30, 2022, according to information released.
The study states that in the first half of 2022, Nigeria’s overall debt to the World Bank increased by $660 million.
As of June 30, 2022, Nigeria owed the IDA and IBRD $12.55 billion and $486 million, respectively, as opposed to $11.97 billion and $410.60 million on December 32, 2021.
According to the World Bank’s Fiscal Year 2021 audited financial filings for IDA, Nigeria was ranked fifth overall as of June 30, 2021, with a $11.7 billion IDA debt stock.
However, according to the World Bank’s recently issued Fiscal Year 2022 audited financial figures for IDA, Nigeria has risen to the fourth spot on the list, with $13 billion IDA.
This shows that Nigeria accumulated about $1.3bn IDA debt within a fiscal year, with the country taking over the fourth top debtor position from Vietnam.
This debt differs from the outstanding loan of $486m from the World Bank’s IBRD. The top five countries on the list slightly reduced their IDA debt stock, except Nigeria. 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 might be considered sustainable for now, was 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.
A former Deputy Governor of the Central Bank of Nigeria and former presidential candidate, Kingsley Moghalu, criticised the increasing borrowing tendency of the government, urging the officials to re-consider other ways of generating revenue for the country.