Nigeria Tops World Bank’s Borrowing Chart with $2.9 Billion in 2022 and Warns of Rising Risk as Developing Nations Grapple with High-Interest Rates
In 2022, Nigeria emerged as the principal beneficiary of World Bank loans, securing approximately $2.9 billion, according to the International Debt Report for 2023 released by the World Bank. Following closely, Tanzania secured $2.7 billion in loans during the same period. The report underscores Nigeria’s substantial reliance on international financial support, revealing that the country owes a total of $14.51 billion to the World Bank as of June 30, 2023, as per data from the Debt Management Office (DMO).
The World Bank’s report also raised alarms about the heightened risk of debt crises in the world’s poorest countries due to the surge in global interest rates. The report disclosed that developing nations spent a record $443.5 billion on servicing their external public and publicly guaranteed debt in 2022. The increase in borrowing costs was identified as diverting crucial resources away from essential sectors like education, health, and the environment.
Debt-service payments, encompassing both principal and interest, experienced a 5% rise compared to the previous year for all developing nations. The report highlighted that the 75 countries eligible to borrow from the World Bank’s International Development Association (IDA) – designed to support the poorest countries – paid a record $88.9 billion in debt-servicing costs in 2022. Over the past decade, interest payments by these countries quadrupled, reaching an all-time high of $23.6 billion in 2022. Projections indicate that overall debt-servicing costs for the 24 poorest countries could surge by up to 39% in 2023 and 2024.
The World Bank expressed concern over the impact of a stronger US dollar on debt service payments for developing countries, making it more expensive for nations to meet their financial obligations. This factor, coupled with climbing debt-servicing costs, has limited new financing options for developing countries.
The World Bank Group’s Chief Economist and Senior Vice President, Indermit Gill, emphasized the urgency for coordinated action to address record debt levels and high-interest rates, urging governments, creditors, and financial institutions to facilitate swifter restructuring arrangements and promote transparency in debt sustainability tools.
Source: Nairametrics
