Nigeria’s servicing of debts to the World Bank and IMF surged to $2.32 billion in 2024, significantly higher than the previous year. The IMF accounted for $1.63 billion of this total, highlighting rising repayment obligations. Overall external debt servicing reached $4.66 billion, with multilateral creditors taking a predominant portion. The World Bank remains Nigeria’s largest multilateral creditor, reflecting a growing dependency on these institutions amidst fiscal challenges.
In 2024, Nigeria has allocated approximately $2.32 billion towards servicing its debts to the World Bank and the International Monetary Fund (IMF). This figure represents a stark increase from the $998.92 million paid in 2023, as reported by the Debt Management Office. Detailed analyses reveal that Nigeria disbursed $689.44 million to the World Bank, predominantly comprised of $663.23 million to the International Development Association and $26.21 million to the International Bank for Reconstruction and Development.
Servicing the IMF has notably intensified, costing Nigeria $1.63 billion, all of which pertains to principal repayments without associated interest or fees. In comparison, the amounts owed to these institutions in 2023 were $597.19 million for the World Bank and $401.73 million for the IMF, indicating an over 134 percent increase year-on-year, primarily fueled by heightened IMF repayments.
Total external debt servicing for Nigeria in 2024 escalated to $4.66 billion, up from $3.5 billion in 2023. Of this total, multilateral creditors constituted the most substantial portion at $2.62 billion, representing 56 percent of overall debt servicing. Notably, the IMF accounted for 35 percent of the external debt servicing, underscoring its growing impact within Nigeria’s fiscal framework.
Payments to commercial creditors decreased to $1.47 billion from $1.93 billion in 2023. Conversely, payments to bilateral creditors increased to $570.67 million, compared to $344.57 million in the preceding year. Despite the drop in commercial payments, the significant rise in obligations to multilateral lenders, especially the IMF, necessitated heightened scrutiny.
The World Bank’s International Development Association remains Nigeria’s largest multilateral creditor, receiving over $663 million in 2024. This amount comprised principal repayments of approximately $414.86 million alongside $248.10 million in interest, signifying the institution’s continuing support. Additionally, payments to the IBRD saw a modest increase due to rising interest rates.
The reliance on payments to the IMF and World Bank has surged, now comprising 49.8 percent of Nigeria’s total external debt servicing, compared to 27.8 percent the previous year. This trend highlights Nigeria’s escalating dependency on multilateral support amid challenges related to revenue collection and a pressured national currency.
Furthermore, Nigeria’s debt obligations to the World Bank rose by $2.36 billion in 2024. In contrast, the IMF’s share saw a significant reduction of $1.67 billion, reflective of ongoing repayments linked to previous emergency facilities. By December 31, 2024, Nigeria’s external debt stock had increased to $45.78 billion, attributed mainly to new borrowings from the World Bank Group.
By the close of 2024, Nigeria’s total debt owed to the World Bank had reached $17.81 billion, indicating a 15.3 percent increase year-on-year, primarily driven by new disbursements. Meanwhile, Nigeria’s liabilities to the IMF significantly decreased from $2.47 billion to $800.23 million, representing a decline of 67.6 percent due to the clearance of previously extended funds.
In multilateral debt composition, World Bank loans constituted 79.8 percent of the total, up from 73.1 percent in 2023, further emphasizing the institution’s influence within Nigeria’s external debt landscape. Consequently, by 2024, the World Bank represented 38.9 percent of federal external debt.
Despite a reduction in IMF shares to just 3.6 percent of multilateral debt, the combined contributions from both the World Bank and the IMF accounted for 83.4 percent of Nigeria’s total multilateral debt. The overall circumstances reveal mounting pressures on Nigeria’s fiscal environment prompted by increased reliance on international financial institutions, necessitating reassessment of borrowing policies.
At a recent Corporate Governance Forum in Abuja, Minister of Finance Wale Edun discussed Nigeria’s strategy to shift from debt reliance towards equity investments to optimize state-owned enterprises. Nevertheless, the continuing trend of borrowing persists as Nigeria seeks funds from the World Bank to facilitate ongoing reforms.
In summary, Nigeria’s repayments to the World Bank and the IMF have surged significantly, reflecting the country’s increasing reliance on multilateral lenders in 2024. With external debt servicing totals reaching $4.66 billion, this raises concerns about fiscal sustainability amidst challenges in generating revenue. The shifts in debt composition, particularly concerning the World Bank’s prominent role, necessitate strategic reassessments of Nigeria’s borrowing practices to mitigate growing financial pressures.
Original Source: punchng.com
