Nigeria Rises to Third-Largest Debtor to World Bank’s IDA, Owing $16.5 Billion”

As of June 30, 2024, Nigeria has emerged as the third-largest debtor to the World Bank’s International Development Association (IDA), reflecting a significant increase in its borrowing. This surge in debt underscores Nigeria’s deepening reliance on international financial assistance, with Nigeria’s World Bank IDA debt now reaching $16.5 billion.

A recent financial statement from the World Bank disclosed that Nigeria’s exposure to the IDA rose by 14.4% from $14.3 billion in the previous fiscal year to $16.5 billion in 2024. The IDA, known for offering concessional loans and grants to the world’s poorest countries, provides financial resources at low interest rates with extended repayment terms, aimed at promoting economic development and reducing poverty.

The leap in Nigeria’s World Bank IDA debt marks the country’s first entry into the top three IDA debtors, moving up from fourth place in 2023. This change occurred as Nigeria secured an additional $2.2 billion in loans during the fiscal year spanning from July 2023 to June 2024 under President Bola Tinubu’s administration.

Comparatively, Bangladesh remains the largest IDA debtor, with its obligations rising from $19.3 billion in 2023 to $20.5 billion in 2024. Pakistan holds the second position with a steady $17.9 billion exposure, while India, previously the third-largest borrower, saw its IDA exposure drop to $15.9 billion, paving the way for Nigeria to ascend to its current position.

Other major borrowers, such as Ethiopia, Kenya, and Vietnam, also show significant IDA exposure, collectively with Nigeria, comprising a substantial portion of the IDA’s total outstanding loans. Meanwhile, the Central Bank of Nigeria has reported that the nation spent $5.39 billion on debt servicing between June 2023 and July 2024, emphasizing the growing financial strain.

During the fiscal year, the Central Bank’s international payment portal recorded the highest monthly debt servicing payment in May 2024, amounting to $854.36 million, with the lowest in June 2024 at $50.82 million. This heavy focus on debt repayment, particularly in relation to Nigeria’s World Bank IDA debt, raises concerns about the sustainability of the country’s financial future.

In summary, Nigeria’s rise to become the third-largest debtor to the World Bank’s IDA underscores a broader narrative of increasing financial dependency, with significant implications for the country’s economic stability. As the burden of Nigeria’s World Bank IDA debt continues to grow, so too does the importance of prudent financial management to ensure long-term sustainability.