Nigeria now highest IDA debtor in Africa

Fresh debt accumulation of International Development Association (IDA) of $1.3billion within a fiscal year may have pushed Nigeria to the top position in Africa, and fourth top debtor in the world.

Nigeria has the highest IDA debt in Africa, as the top three IDA borrowers (India, Bangladesh and Pakistan) are from Asia.

The World Bank Fiscal Year 2021 audited financial statements, known as the IDA financial statement, showed that Nigeria was rated fifth on the list with $11.7bn IDA debt stock as of June 30, 2021.

However, the newly released World Bank Fiscal Year 2022 audited financial statements for IDA showed that Nigeria has moved to the fourth position on the list, with $13bn IDA debt stock as of June 30, 2022.

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This shows that Nigeria accumulated about $1.3bn IDA debt within a fiscal year, with the country taking over the fourth top debtor position from Vietnam.

This debt is different from the outstanding loan of $486m from World Bank’s International Bank for Reconstruction and Development.

Remarkably, while the top five countries on the list slightly reduced their IDA debt stock, contrary was the case with Nigeria.

India, which remains No 1 on the list, reduced its IDA debt stock from $22 billion in the previous fiscal year to $19.7 billion, followed by Bangladesh from $18.1 billion to $18 billion.

Next is Pakistan which cut its debt from $16.4 billion to $15.8 billion, and Vietnam, which went down the list to fifth position, from $14.1 billion to $12.9 billion.

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The bank said: “Nigeria’s debt remains sustainable, albeit vulnerable and costly, especially due to large and growing financing from the Central Bank of Nigeria (CBN)”.

However, the Washington-based global financial institution added that the country’s debt was also at risk of becoming unsustainable in the event of macro-fiscal shocks.

The bank further expressed concerns over the nation’s cost of debt servicing, which according to it, disrupted public investments and critical service delivery spending.

Specifically, Nigeria’s budget deficit has risen to at least N30.58 trillion in the last seven years of President Mohammadu Buhari administration with borrowing from the Central Bank of Nigeria (CBN) hitting N19.01 trillion by April 2022.

This is aside from the domestic debt market and International Capital Market, bilateral and multilateral agencies, basically to plug the budget deficit in the period under review.

The deficits were incurred from the third quarter of 2015 and the first four months of 2022 as the budget expenditure of the government hit N54.98 trillion within the seven years period.

More worrisome is the fact that analysis showed that the present administration spends the bulk of its fiscal expenditure on personnel, debt services and the least on capital.