Investigation has shown that Nigeria faces the challenge of an unutilized World Bank loan amounting to $8.25 billion as of July 2023.
This information has been meticulously gleaned from the World Bank’s official Summary Statement of Loans/Credit/Grants, accessible on its website.
This substantial sum comprises $7.45 billion from the International Development Association (IDA) and an additional $1.12 billion from the International Bank for Reconstruction and Development (IBRD). The funds encompass loans that have been approved but remain unsigned, alongside those loans for which commitments have been signed.
Over the years, both the IBRD and the IDA, integral parts of the World Bank, have extended financial assistance to Nigeria.
The IBRD specializes in lending to governments of middle-income and creditworthy low-income nations, while the IDA offers concessional loans, known as credits, and grants to the world’s most impoverished countries.
As previously reported, the disbursement of these loans could potentially elevate Nigeria’s debt owed to the World Bank from $12.72 billion to a staggering $21.15 billion, marking a substantial increase of 66.27 percent.
These findings are in line with the audited financial statements of the World Bank for the fiscal year 2022, which disclosed that the bank had yet to disburse approximately $8.12 billion to Nigeria as of June 30, 2022.
Explaining the reasons behind the delay in disbursing the loans, particularly those with signed loan commitments, the bank, in its 2022 financial statements, attributed it to the fact that “loans are not effective, and disbursements do not commence until the borrowers and/or guarantors fulfill certain actions and provide required documentation.”
Data sourced from the Debt Management Office reveals that as of March 31, 2023, Nigeria’s outstanding debt to the World Bank stands at $14.33 billion.
A detailed breakdown indicates that this figure includes a $13.84 billion IDA loan and an additional $488.35 million loan, as outlined in the DMO’s external debt report.
In recent developments, the Federal Government of Nigeria has publicly stated its reluctance to seek further loans from both domestic and foreign sources.
This declaration came in the wake of the government’s decision to remove subsidies on petrol and harmonize exchange rates. Minister of Finance and Coordinating Minister for the Economy, Wale Edun, clarified this stance following the inaugural Federal Executive Council meeting held in Abuja.
However, Edun went on to emphasize that the government remains committed to fulfilling the loan requirements outlined in the 2023 budget. The overarching objective is to reduce reliance on borrowing for recurrent expenses, focusing instead on securing loans for capital expenditures, which offer returns and are self-financing.
In the face of these financial intricacies, Nigeria’s fiscal policies continue to evolve, reflecting a steadfast commitment to achieve financial sustainability and economic growth.
