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Nigeria Moves to Fourth in World Debt Ranking

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CEM REPORT | Nigeria presently is the fourth country in the world with the most debt stock.

The African giant who ranked fifth in 2021, has moved to the fourth position on the list, with $13bn in debt stock as of June 30, 2022.

This makes the nation the only African country with the highest IDA debt stock.


This is according to the newly released World Bank Fiscal Year 2022 audited financial statements for International Development Association (IDA).

The International Financial Institution in its audited financial statements revealed that Nigeria has accumulated about $1.3bn IDA debt within the 2022 fiscal year, from $11.7bn IDA debt stock as of June 30, 2021, taking over the fourth top debtor position from Vietnam.

The statement further reveals that Nigeria is the only country on the top five list whose IDA debt stock witnessed an increase and the only African country with the highest IDA debt as the top three IDA borrowers (India, Bangladesh and Pakistan) are from Asia.

From the report, India still tops the list although with a reduction in its IDA debt stock from $22bn in the previous fiscal year to $19.7bn. Bangladesh follows with $18bn from $18.1bn.

Pakistan comes next from $16.4bn to $15.8bn, while Vietnam, went down the list to the fifth position, from $14.1bn to $12.9bn.

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

The World Bank disclosed recently that Nigeria’s debt, which may be considered sustainable for now, is vulnerable and costly.

“Nigeria’s debt remains sustainable, albeit vulnerable and costly, especially due to large and growing financing from the Central Bank of Nigeria.”

However, the financial institution warned that Nigeria’s debt was also at risk of becoming unsustainable in the event of macro-fiscal shocks.

The bank further adds that the nation’s cost of debt servicing disrupts public investments and critical service delivery spending.

The statement by the World Bank is confirmed by the Director General of the Debt Management Office, Patience Oniha, in a statement where the DMO stated that high debt levels would often lead to high debt services and affect investments in infrastructure.

“High debt levels lead to heavy debt service which reduces resources available for investment in infrastructure and key sectors of the economy.”

The Fiscal Policy Partner and Africa Tax Leader of PwC, Mr Taiwo Oyedele, expressed his agreement with the World Bank on the high cost of debt servicing.

“I agree with the World Bank. Although the debt to GDP ratio is not too high, if you think about the debt service cost to revenue ratio, it is already over 70 per cent. That’s when you know it’s costly.

“Nigeria borrows at double-digit, and even when we borrow in dollars, the rates are very high and then you devalue the naira and the cost of servicing the debt in naira goes up because it is dollar-dominated debt.

“Put all of that together, and you can easily say to yourself that even though our debt to GDP ratio is very low, our cost of borrowing is unsustainable because it is very high, and therefore, make it very costly.”

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