Top three World Bank debtors include Nigeria.

 Nigeria now ranks among the top 10 International Development Association borrowers according to the World Bank due to rising debt. Nigeria was ranked fifth on the list with $11.7 billion in IDA debt stock as of June 30, 2021, according to the World Bank's Fiscal Year 2021 audited financial statements, also known as the IDA financial statement. Nigeria has moved up to fourth place on the list, according to the World Bank's recently issued Fiscal Year 2022 audited financial records for IDA, with a $13 billion IDA debt stock as of June 30, 2022.This demonstrates that Nigeria, which replaced Vietnam as the fourth-largest debtor, accumulated roughly $1.3 billion in IDA debt in a fiscal year. 

This debt is distinct from the $486 million loan that is yet unpaid from the International Bank for Reconstruction and Development of the World Bank. Except for Nigeria, the top five nations on the list somewhat decreased their IDA debt stock. Bangladesh followed India in reducing its IDA debt stock, which fell from $18.1 billion to $18 billion. Bangladesh is remains at the top of the list. Pakistan, which dropped from $16.4 billion to $15.8 billion in debt, is next, and Vietnam, which dropped to fifth place from $14.1 billion to $12.9 billion, is last. Due to the fact that the top three IDA borrowers are all from Asia (India, Bangladesh, and Pakistan), Nigeria has the biggest IDA debt in Africa. Recently, the World Bank revealed that Nigeria's debt, while potentially manageable for the time being, is risky and expensive.

The Central Bank of Nigeria continues to provide significant and expanding finance, according to the bank, which makes Nigeria's debt manageable even though it is risky and expensive. The international financial organization based in Washington did warn that in the event of macro-fiscal shocks, the country's debt also ran the risk of becoming unsustainable. The nation's cost of debt servicing, which the bank claimed disrupted public expenditures and crucial service delivery spending, was another area of worry. Concerns concerning the federal government's expanding debt profile have been expressed by economists as well. Mr. Taiwo Oyedele, a Fiscal Policy Partner and Africa Tax Leader at PwC, agreed with the World Bank that debt servicing is expensive.

I concur with the World Bank, he declared. Even though the debt to GDP ratio is not excessive, the debt servicing cost to revenue ratio is already higher than 70%. You will then be aware of its expense. "Nigeria borrows at double-digit rates, and even when we borrow in dollars, the rates are very high. Then, as the naira depreciates, the price of paying the debt in naira increases since the loan is primarily in dollars. When you add everything up, it's simple to conclude that even if our debt to GDP ratio is quite low, our cost of borrowing is unacceptably high, making it very expensive.

Kingsley Moghalu, a former presidential candidate and deputy governor of the Central Bank of Nigeria, criticized the government's propensity for expanding borrowing and urged officials to reevaluate alternative sources of revenue for the nation. Moghalu asserted that it was also unreasonable to borrow money for the construction of infrastructure because the choices for public-private partnerships might be expanded by the administration. In a paper from the Debt Management Office's Director General, Patience Oniha, which our correspondent recently acquired, the DMO noted that excessive debt levels would frequently result in expensive debt services and have an impact on investments in infrastructure.

The DMO DG claims that high debt levels result in heavy debt servicing, which lowers the amount of money available for investment in infrastructure and other economic sectors.

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