Nigeria’s external debt profile has been a cause for concern in recent times, and a new report from the Debt Management Office (DMO) reveals that the country’s borrowing from the World Bank has increased to $14.34bn as of March 31, 2023.
This marks a $410m increase from the $13.93bn debt recorded by the DMO as of December 31, 2022.
The World Bank provides financial assistance to countries through two branches: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The former lends to middle-income and creditworthy low-income countries, while the latter provides concessionary loans and grants to the poorest countries.
As of March 31, 2023, Nigeria had a debt of $488.66m from IBRD and $13.85bn from IDA. The country’s first loan from the World Bank dates back to the fiscal year of 1947, and since then, Nigeria has borrowed a total of $7.49bn from IBRD and $26.17bn from IDA. This brings the total borrowed from the World Bank to $33.66bn.
It is worth noting that some of the loans approved by the World Bank have been cancelled, with about $3.28bn in approved loans being scrapped. However, about $7.29bn has been repaid on the loans, with $7.86bn yet to be disbursed by the bank.
The DMO has recently defended Nigeria’s debt from the World Bank, stating that borrowing from the IDA is a positive development for the country. According to the DMO, IDA loans are concessional, meaning that they attract low charges and are for very long tenors in some cases, exceeding 30 years. This makes them ideal for funding development projects in countries like Nigeria.
The DMO also pointed out that accessing IDA funding allows the government to reduce debt service costs, as non-concessional funding is usually more expensive and for shorter tenors. The agency emphasized that it would be inefficient for Nigeria to borrow from commercial sources when concessional funding sources like IDA are available.