World Bank: Nigeria among developing countries with high debt risk exposure

The World Bank has stated that Nigeria is ranked fifth single borrowing country with the highest debt risk exposure across the globe.

This is contained in the fiscal year 2021 (FY21) financial statement for International Development Association (IDA), a World Bank financial institution that offers concessional loans and grants to the poorest developing countries.

The top ten developing countries with high debt risk exposure include: India with $22 billion, Bangladesh ($18.1 billion), Pakistan ($16.4 billion), Vietnam ($14.1 billion), Nigeria ($11.7 billion).

Others are Ethiopia ($11.2 billion), Kenya ($10.2 billion), Tanzania ($8.3 billion), Ghana ($5.6 billion), and Uganda ($4.4 billion).

“For FY22, the single borrower limit (SBL) has been set at $45 billion (25 percent of $180.9 billion of equity as of June 30, 2021), marginally higher than FY21,” the statement reads.

“As of June 30, 2021, the ten countries with the highest exposures accounted for 66% of IDA’s total exposure.

“Monitoring these exposures relative to the SBL, requires consideration of the repayment profiles of existing loans, as well as disbursement profiles and projected new loans and guarantees.”

According to the statement, a total of $19.54 billion loan has been agreed to be disbursed to Nigeria.

Out of the $19.54 billion include $1.46 billion loan approved but not yet signed, $6.61 billion signed loan commitment, and $11.47 billion outstanding loan.

The IDA said it has “agreed to provide debt relief in return for future compensation from members for forgone reflows, ensuring that IDA’s financial capacity would not be reduced.

“For a borrower to be eligible for debt relief on its loans with IDA, it is required to maintain macroeconomic stability, carry out key structural and social reforms, and maintain all loans in accrual status”.

Meanwhile, in the FY21 statement of the International Bank for Reconstruction and Development (IBRD), a total of $1 billion loan has been agreed with Nigeria.

A breakdown of the $1 billion provided by the World Bank’s institution (IBRD) which provides loans and advice to middle-income countries, includes $500 million loan approved but not yet signed, $89 million signed loan commitment, and $411 million outstanding loans.