Wisdom Engraced
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Nigeria has retained its position as the third-largest debtor to the World Bank’s International Development Association (IDA), with outstanding obligations of $18.2 billion as of June 30, 2025. This represents a $1.7 billion increase from $16.5 billion in June 2024.
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According to Dr Muda Yusuf, economist and CEO of the Centre for the Promotion of Private Enterprise, “The key issue is debt sustainability, which depends primarily on the country’s revenue capacity to service its obligations.” He emphasised the need for a disciplined approach to debt management, saying, “Nigeria should be cautious with foreign loans due to the exchange rate risks they pose,” noting that domestic debt is generally easier to manage.
The IDA’s top ten borrowers account for 61% of its total exposure, with Nigeria’s continued presence near the top of the debtor table reflecting its persistent financing gap for development spending. The country’s total debt to the World Bank now accounts for 39.7% of its total external debt stock.
As Dr. Yusuf warned, “Without a strong cash flow to meet repayment schedules, Nigeria risks falling into a vicious cycle of borrowing to service existing loans, which would perpetuate fiscal vulnerability.” It is essential for Nigeria to prioritize debt sustainability and ensure that projects funded by loans directly support the economy’s capacity to repay.
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Jonathan Nwokpor
