Nigeria’s external debt stock skyrockets by 252.2% in a decade – World Bank

…principal repayment stood at $4.5bn in 2018

Nigeria’s total external debt stock grew sharply by 252.2 percent in a decade to $46.24 billion in 2018, from $13.1 billion in 2008, analysis of the World Bank International Debt Statistics 2020 shows.

According to the World Bank’s International Debt Statistics 2020, total external debt of low- and middle-income countries climbed 5.3 percent to $7.8 trillion last year, while net debt flows (gross disbursements minus principal payments) from external creditors tumbled 28 percent to $529 billion.

Although on average the external debt burden of low- and middle-income countries was moderate, several countries have been on a deteriorating debt trajectory since 2009, the report indicates.

The share of low- and middle-income countries with debt-to- Gross National Income (GNI) ratios below 30 percent has shrunk to 25 percent, down from 42 percent 10 years ago. Similarly, the share of countries with high debt-to-export ratios has climbed.

“To grow faster, many developing countries need more investment that meets their development goals,” World Bank Group President David Malpass said. “Debt transparency should extend to all forms of government commitments, both explicit and implicit. Transparency is a critical part of attracting more investment and building an efficient allocation of capital, and these are essential in our work to improve development outcomes.”

Debt stocks were driven up by a 15 percent jump in China, fuelled by investor appetite for renminbi-denominated assets. Excluding the 10 largest borrowers (Argentina, Brazil, China, India, Indonesia, Mexico, the Russian Federation, South Africa, Thailand, and Turkey), external debt stocks rose 4 percent. Sub-Saharan countries excluding South Africa saw debts stocks swell by 8 percent on average in 2018, and over half the countries in the region have seen external debt stocks double since 2009.

Nigeria’s external debt stock spiked 30 percent in 2017 but slowed to 16 percent last year.

Nigeria’s external debt stock as a percentage of GNI rose from 4 percent in 2008 to 12 percent in 2018 while its reserve to external debt stock plunged from 404 percent to 93 percent in the same period.

External long-term debt stock rose 240.7 percent to $43.91 billion in 2018 from $12.9 billion in 2014.

The report showed that Nigeria’s use of International Monetary Fund (IMF) credit surged some 862 percent from $242 million in 2008 to $2.33 billion in 2018, but averaged a negative rate of one percent in the last five years.

Principal re-payment of the long-term loan has steadily risen from 4.5 percent of the total external loan stock in 2008 to 9.6 percent last year following the repayment of $4.46 billion out of $46.24 billion debt stock.

Interest repayment, however, has skyrocketed by 1,418 percent from $87 million in 2008 to $1.32 billion in 2018.

The report also showed that as at 2018, more than 50 percent of Nigeria’s long-term external debt stock were public and publicly guaranteed and had grown by 526 percent to $24.42 billion from $3.9 billion in 2008.

Official creditors accounted for $13.75 billion while the multilaterals accounted for $10.87 billion of which the World Bank is owed $8.6 billion.

Private nonguaranteed debt as at 2014 made up about 70 percent of Nigeria’s long-term external debt stock at $8.99 billion but as of 2018 makes up about 44 percent at $19.49 billion.



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