The World Bank stated yesterday that Nigeria’s external debt increased from $18.3 billion in 2010 to $103 billion in 2022. The bank added that the country spent $9.6 billion on debt servicing in 12 years.
According to the “International Debt Report” released by the bank, Nigeria’s foreign debts rose astronomically by 305 per cent during the 12 years.
The report added that external debt stood at $76.21 billion in 2021 but rose quickly to $103 billion by the first half of 2022 (H2 2022).
Furthermore, cumulative annual interest payments on external debts rose sharply by 2,819 per cent to $1.73 billion in 2021 from $59.3 million in 2010.
Investors King understands that the implementation of Nigeria’s budget heavily relies on external borrowings.
An example is the construction of railway tracks which are heavily funded by the Chinese loan while the country’s 2023 budget proposal also has a deficit of about N10 billion which will be significantly sourced from international creditors.
Experts have warned that Nigeria’s rising debt could hamper the nation’s overall development, especially if the debts are not tied to projects with economic value.
Meanwhile, the report added further that principal repayment on the external debt gulped $30.66 billion during the 12 years period with annual principal repayment rising by 469 percent to $6.77 million in 2021 from $1.189 million in 2010.
In the executive summary, the report noted that Nigeria and other developing countries are at risk of serious debt-related issues. The report cautioned that rising interest rates coupled with the recent sluggish economic movement may force a number of developing countries into a debt crisis.
Speaking on the report, World Bank Country Director for Nigeria, Shubham Chaudhuri stated that Nigeria’s economy does not reflect the huge level of debt stock, adding that multilateral institution is worried that the cost of servicing debt could exceed the nation’s revenue.
