DMO explains $13bn World Bank debt

The Debt Management Office (DMO) of Nigeria has responded to recent media reports about the country’s debt to the World Bank. The DMO stated that Nigeria’s $13.46 billion World Bank loan is a positive development for the country as the loans from the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD) were concessional, with low charges and long tenors. This meant that accessing IDA funding allowed the government to reduce debt service costs, as non-concessional funding is typically more expensive and for shorter tenors.

The DMO clarified that IDA loans are concessional, which the authors of the media reports had not taken into consideration. It was more efficient for Nigeria to borrow from IDA as it was a cheaper source of funding for longer periods than borrowing from commercial sources. The DMO also stated that borrowing from IDA was in line with Nigeria’s Medium-Term Debt Management Strategy (2020-2023) which aimed to maximize funds from multilateral and bilateral sources to access cheaper and longer-tenured funds.

The media reports had noted that Nigeria’s indebtedness to IDA grew from $6.29 billion in 2015 to $13.46 billion in 2022. The DMO confirmed that the figures were correct, but stressed that this was a positive development for Nigeria as concessional loans were required to fund development in the country. The IDA loans had long tenors of up to 30 years and low charges, which made them a suitable source of funding for Nigeria.

The DMO concluded by stating that the World Bank loans were a plus for Nigeria and urged the media to report on the country’s debt in a more positive light. It also emphasised that the loans were used to finance critical infrastructure and social programmes that were necessary for Nigeria’s development.