World Bank: Nigeria among developing countries that serviced debt with $443.5bn

Nigeria and other developing countries spent a record $443.5 billion to service their external public and publicly-guaranteed debt in 2022.

This is according to the World Bank in its latest International Debt Report.

In April, the World Bank had revealed that the country used 96.3 per cent of revenue generated in 2022 to service debt, saying that the constant fiscal deficit has aggravated the nation’s public debt stock.

According to the new International Debt Report, which showed that poorest countries face the risk of debt crises as borrowing costs surge, the increase in costs shifted scarce resources away from critical needs such as health, education and the environment.

The report revealed that debt-service payments, which include principal and interest, increased by 5 per cent over the previous year for all developing countries.

It said the 75 countries eligible to borrow from the World Bank’s International Development Association (IDA), which supports the poorest countries, paid a record $88.9 billion in debt-servicing costs in 2022.

Over the past decade, interest payments by these countries have quadrupled, to an all-time high of $23.6 billion in 2022.

Overall debt-servicing costs for the 24 poorest countries are expected to balloon in 2023 and 2024—by as much as 39 per cent, the report stated.

Indermit Gill, World Bank Group’s Chief Economist and Senior Vice President, said: “Record debt levels and high interest rates have set many countries on a path to crisis.

“Every quarter that interest rates stay high results in more developing countries becoming distressed—and facing the difficult choice of servicing their public debts or investing in public health, education, and infrastructure.

“The situation warrants quick and coordinated action by debtor governments, private and official creditors, and multilateral financial institutions—more transparency, better debt sustainability tools, and swifter restructuring arrangements. The alternative is another lost decade.”

Haishan Fu, Chief Statistician of the World Bank and Director of the World Bank’s Development Data Group, said: “Knowing what a country owes and to whom is essential for better debt management and sustainability.

“The first step in avoiding a crisis is having a clear picture of the challenge. And when problems arise, clear data can guide debt restructuring efforts to get a country back on track towards economic stability and growth.

“Debt transparency is the key to sustainable public borrowing and accountable, rules-based lending practices which are so vital to ending poverty on a livable planet.”

The report noted that IDA-eligible countries have spent the last decade adding to their debt at a pace that exceeds their economic growth—a red flag for their prospects in the coming years.

It said in 2022, the combined external debt stock of IDA-eligible countries hit a record $1.1 trillion — more than double the 2012 level.

From 2012 through 2022, IDA-eligible countries increased their external debt by 134%, outstripping the 53% increase they achieved in their gross national income (GNI).