Undisbursed loans could increase Nigeria’s debt to the World Bank from $12.72 billion to $21.15 billion, PUNCH has learned.
This indicates that outstanding loans could increase Nigeria’s debt to lending institutions by 66.27%.
The World Bank’s audited financial statements for the fiscal year 2022 show that the bank has yet to disburse approximately $8.12 billion in Nigeria as of June 30, 2022.
These outstanding loans include approved but unsigned loans and signed loan commitments.
Further breakdowns show that undisbursed loans included $7.6 billion from the International Development Association (IDA) and $514 million from the International Bank for Reconstruction and Development (IBRD).
Explaining the reason for the undisbursed loans, specifically the signed loan commitments, the bank said that “these loans are not valid and disbursement only begins when the borrower and/or the guarantee to take certain actions and provide documents”.
IBRD provides loans to middle-income and creditworthy low-income governments, while IDA provides concessional loans (called loans) and grants to governments of the poorest countries.
A breakdown shows that Nigeria borrowed $12.23 billion from IDA and $486.1 million from IBRD.
The top five countries on the list have slightly reduced their outstanding debt with IDA, 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 recently announced that Nigeria’s debt, currently considered sustainable, is fragile and costly.
But the Washington-based global financial institution added that there is also a risk that the country’s debt will become unsustainable in the event of a macro-fiscal shock.
The bank has also expressed concern about the cost of servicing the country’s debt, saying it is disrupting spending on public investment and the provision of critical services.