Nigeria’s World Bank IDA Debt Rises to $18.7bn, Ranking Country Among Top Borrowers!
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Nigeria’s World Bank IDA Debt Rises to $18.7bn, Ranking Country Among Top Borrowers!
Reported by Mustapha Labake Omowumi (Journalist) | Sele Media Africa
Nigeria’s debt exposure to the International Development Association (IDA), the concessional lending arm of the World Bank, has climbed sharply to $18.7 billion, reinforcing concerns about the country’s growing reliance on multilateral financing amid persistent fiscal pressures.
Latest figures indicate the debt stock increased by approximately $1.9 billion within one year, positioning Africa’s largest economy as the third-largest borrower from the IDA globally.
What the New Debt Figures Show
Data released by the World Bank highlights a steady upward trajectory in Nigeria’s concessional borrowing. The IDA typically provides low-interest, long-tenor loans to low- and lower-middle-income countries to support development priorities such as infrastructure, social protection, and economic reforms.
Nigeria’s rising exposure reflects continued dependence on external concessional funding to bridge budget deficits, finance reforms, and support critical sectors of the economy.
Drivers Behind the Increase
Analysts attribute the debt growth to several structural factors:
Revenue constraints: Nigeria’s historically low tax-to-GDP ratio continues to limit fiscal space.
Exchange rate pressures: Currency depreciation has increased the naira value of external obligations.
Development financing needs: Ongoing investments in power, social programmes, and economic reforms require long-term funding.
Shift toward concessional borrowing: Authorities have increasingly favoured multilateral loans viewed as cheaper than commercial debt.
Economic experts note that while IDA loans are considered among the most affordable forms of external borrowing, sustained accumulation still adds to overall debt vulnerability if revenue growth does not keep pace.
Implications for Nigeria’s Debt Sustainability
Nigeria’s total public debt has been rising in recent years, with debt servicing already consuming a significant share of government revenue. The growing IDA exposure carries mixed implications:
Positive outlook
Concessional terms mean lower interest costs compared with Eurobonds or commercial loans.
Funds often support development and reform programmes.
Multilateral backing can boost investor confidence.
Areas of concern
Continued borrowing without strong revenue expansion may strain fiscal sustainability.
External debt exposure increases vulnerability to exchange rate shocks.
Rising debt service obligations could crowd out social spending.
Fiscal policy experts broadly agree that the sustainability of Nigeria’s borrowing strategy will depend heavily on the success of ongoing revenue reforms and economic growth initiatives.
Government Position and Policy Context
Nigerian authorities have repeatedly stated their preference for concessional financing from institutions such as the World Bank and the African Development Bank, arguing that these loans are more sustainable than expensive commercial debt.
The federal government is simultaneously pursuing tax reforms, subsidy adjustments, and broader macroeconomic restructuring aimed at improving revenue mobilisation and stabilising public finances.
Broader Regional Context
Across Africa, several countries have increased their reliance on IDA financing in the wake of global economic shocks, including the COVID-19 pandemic and tightening international credit conditions. Nigeria’s position as one of the largest borrowers underscores both its scale and its significant development financing needs.
Sources
World Bank data releases
Reuters
Bloomberg
Punch Newspapers
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