Nigeria on top 10 list of countries with high debt risk exposure

Nigeria has been listed by the World Bank as one of the top 10 countries in the World with high debt risk exposure.

The World Bank made this known in its recently released FY21 audited financial statements for International Development Associations (IDA’s).

The financial statement stated that, “IDA faces two types of credit risk: country credit risk and counterparty credit risk.”

Country credit risk is the risk of loss due to a country not meeting its contractual obligations.

While counterparty credit risk is the risk of loss attributable to a counterparty not honoring its contractual obligations.

It further stated that “IDA is exposed to commercial as well as noncommercial counterparty credit risk. As of June 30, 2021, the 10 countries with the highest exposures accounted for 66 per cent of IDA’s total exposure.”

The countries as listed on the top 10 are:

1. India $22bn IDA Debt stock

2. Bangladesh $18bn IDA Debt stock

3. Pakistan $16.4bn IDA Debt stock

4. Vietnam $14.1bn IDA Debt stock.

5. Nigeria $11.7bn IDA Debt stock

6. Ethiopia $11.2bn IDA Debt stock.

7. Kenya $10.2bn IDA Debt stock.

8. Tanzania $8.3bn IDA Debt stock,

9. Ghana $5.6bn IDA Debt stock,

10. Uganda $4.4bn IDA Debt stock.

It was further discovered that Nigeria’s undisbursed balance with the World Bank is about $8.656bn as at June 30, 2021.

According to the financial statement for the International Bank for Reconstruction and Development, Nigeria has a total of $589m undisbursed balance, consisting of $500m loans approved but not yet signed and $89m signed loan commitment.

The financial statement for IDA disclosed that Nigeria had a total undisbursed balance of $8.07bn, consisting of $1.462bn loans approved but not yet signed and $6.61bn signed loan commitment.

The financial statement for IBRD disclosed that although certain amount of loans has been agreed ‘the loans are not effective and disbursements do not start until the borrowers and/or guarantors take certain actions and furnish documents’.

A total of $1bn loans were agreed between Nigeria and the World bank’s IBRD, of which Nigeria’s outstanding loan is $411m.

For IDA, a total of $19.54bn loans were agreed upon, of which Nigeria’s outstanding loan is $11.47bn.

According to the Debt Management Office, Nigeria owes the World Bank a total of $11.51bn, consisting of $11.10bn IDA loans and $410.23m IBRD loans as of March 31.