Undisbursed loans may drive Nigeria’s debt to the World Bank from $12.72bn to $21.15bn.
This shows that the yet-to-be disbursed loans can increase Nigeria’s debt to the lending institution by 66.27 per cent.
The audited financial statements of the World Bank for the fiscal year 2022 showed that the bank was yet to disburse about $8.12bn to Nigeria as of June 30, 2022.
A breakdown further showed that the undisbursed loans included $7.60bn from the International Development Association, IDA, and $514m from the International Bank for Reconstruction and Development, IBRD.
These undisbursed loans encompass loans approved but not signed as well as the signed loan commitments.
Explaining the reason for the yet-to-be disbursed loans, particularly the signed loan commitments, the bank said that these “loans are not effective and disbursements do not start until the borrowers and/or guarantors take certain actions and furnish documents.”
The IBRD and the IDA, which make up the World Bank, have, over the years, advanced loans to Nigeria.
The IBRD lends to governments of middle-income and creditworthy low-income countries, while the IDA provides concessionary loans – called credits – and grants to governments of the poorest countries.
The Debt Management Office had disclosed that Nigeria’s debt to the Washington-based bank was $12.72bn as of March 31, 2022.
A breakdown showed that Nigeria borrowed $12.23bn from the IDA and $486.10m from the IBRD.
In an earlier report, it was disclosed that Nigeria owed the World Bank $13.04bn as of June 30, 2022.
According to the report, the total debt owed to the World Bank by Nigeria rose by $660m in the first six months of 2022.
Nigeria’s debt to the IDA and IBRD stood at $12.55bn and $486m respectively as of June 30, 2022, compared to $11.97bn and $410.60m in December 31, 2021.
It was also reported that rising debt pushed Nigeria up the World Bank’s top 10 IDA borrowers’ list.
The World Bank Fiscal Year 2021 audited financial statements for IDA 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 had moved to the fourth position on the list, with $13bn IDA debt stock as of June 30, 2022.
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 differs from the outstanding loan of $486m from the World Bank’s IBRD.
The top five countries on the list slightly reduced their IDA debt stock, except Nigeria.
Nigeria has the highest IDA debt in Africa, as the top three IDA borrowers (India, Bangladesh and Pakistan) are from Asia.
The World Bank disclosed recently that Nigeria’s debt, which might be considered sustainable for now, was vulnerable and costly.
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.”
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.
A former Deputy Governor of the Central Bank of Nigeria and former presidential candidate, Kingsley Moghalu, in a recent PUNCH report, criticised the increasing borrowing tendency of the government, urging the officials to re-consider other ways of generating revenue for the country.