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The Debt Management Office (DMO) says Nigeria’s indebtedness to the World Bank which grew from 6.29 billion dollars in 2015 to 13.46 billion dollars in 2022 is a positive development.
According to a statement by the DMO in Abuja on Wednesday, this is contrary to media reports about the nature of World Bank loans to the country. The News Agency of Nigeria (NAN) reports that the media has been awash with controversy about World Bank loans to the country in recent times.
This followed announcement by the Minister of Finance, Budget and National Planning, Zainab Ahmed, that the Federal Government had secured 800 million dollars from the World Bank to provide post-petroleum subsidy palliative. The palliatives are meant for over 50 million Nigerians ahead of June 2023.
According to the DMO, loans from the World Bank come from the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD). “IDA loans are concessional, that is, they allow 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 are usually more expensive. Indeed, it will be inefficient for Nigeria to borrow from commercial sources when concessional funding sources such as ODA is available,” the DMO said.
It said that Medium-Term Debt Management Strategy (MTDS 2020-2023) outlined effective debt management models for the country. “The MTDS actually states that we will maximise funds available to Nigeria from multilateral and bilateral sources in order to access cheaper and longer tenor funds. Therefore, borrowing from IDA is actually an implementation of this strategy.” (NAN)
