The over $13 billion loan owed by the federal government to the World Bank and other international development agencies is no cause for alarm, the Debt Management Office, DMO, has said.
The federal and state governments total debt balance to the World Bank, International Development Association, IDA, and the International Bank for Reconstruction and Development, IBRD, currently stands at $13. 46 billion .
The development has not been well received by many Nigerians who insist that the administration of President Muhammadu Buhari has borrowed too much, leaving huge burdens on the future generations.
The DMO, however , stated that the debt from these agencies are good because they carry small interest, apart from the fact that such loans have a long tenure of repayment.
The justification came amidst reports from a section of the nation’s media condemning the government for overburdening the country with debt.
DMO said: “Following media reports on Nigeria’s debt to the World Bank, the Debt Management Office (DMO) wishes to clarify to the general public that loans from the World Bank come from the International Development Association (IDA) and the International Bank for Reconstruction and Development (BRD).
“According to the media reports, Nigeria’s indebtedness to IDA grew from $6.29 billion in 2015 to $13.46 billion in 2022. Whilst these figures are correct for IDA loans only, it is actually a positive development for Nigeria contrary to the narrative in the media reports.
“Positive development in the sense that IDA loans are concessional, that is, they attract low charges and are for very long tenors in some cases, exceeding 30 years. These are the types of loans required to fund development in countries such as Nigeria. By accessing IDA funding, the Government is actively reducing debt service costs, since non-concessional funding is usually more expensive and for shorter tenors.
“Indeed, it will be inefficient for Nigeria to borrow from commercial sources when concessional funding sources such as IDA are available.
“It would seem that the authors of the media reports did not put into consideration the fact that IDA Loans are concessional, and that it is a plus that Nigeria qualifies for such Loans.
“In addition, it may be useful at this time to state that Nigeria’s Medium-Term Debt Management Strategy (2020-2023) actually states that we will, “Maximize funds available to Nigeria from multilateral and bilateral sources in order to access cheaper and long tenured funds. Therefore, borrowing from IDA (a multilateral organization is actually an implementation of this strategy.”
Meanwhile, not a few watching the nation’s economy insist that the incoming administration will be limited by resource to deliver on its promise to Nigerians due to the huge debt curently owed by the country.
Already, over 80 percent of the country’s revenue is being used to service local and foreign debt, leaving a huge gap on the government’s resources to provide essential infrastructure.
The situation will get worse after President Buhari hands over to Bola Ahmed Tinubu on May 29, critics of the government said.
