Nigeria’s Debt Management Office (DMO) has said the report that the World Bank had listed Nigeria among 10 high-debt risk nations was false but misleading.
The DMO in a statement on Wednesday, explained that its attention was drawn to a newspaper report titled, “World Bank Lists Nigeria, Nine Others as High-debt Risk Nations,” noting that the said publication claimed that the World Bank had classified Nigeria as one of the top 10 ‘high-debt risk nations’ in the International Development Association (IDA) Audited Financial Statement for the Fiscal Year 2021 (July 1, 2020 – June 30, 2021) published on Monday, August 9, 2021.
It described the newspaper publication as not only false and misleading, but also suggests an inadequate understanding of the essence of the World Bank’s report.
“The World Bank’s Report was an assessment of the performance of IDA and not the performance of the IDA Loans nor the debt repayment capacity of the beneficiaries of IDA Loans,” the DMO said.
“By way of explanation, the World Bank through IDA, gives concessional loans to poor and developing countries to help them achieve improvements in growth, job creation, poverty reduction, governance, the environment, climate adaptation and resilience, human capital, infrastructure, and debt transparency. Nigeria is a beneficiary of IDA loans.”
The DMO said it was important to re-emphasise that the World Bank’s Report, which was misrepresented in the said newspaper publication was focused only on the composition of IDA’s loan portfolio and did not make any reference to the debt sustainability of the top 10 beneficiary countries of IDA loans, such as India, Pakistan, Nigeria, Kenya and Ghana that the newspaper erroneously referred to as ‘high-debt risk nations’.
It stressed that IDA loans are typically for tenors of 30 – 40 years, grace period (moratorium on principal repayment) of 7 – 10 years and Service Fee of only 0.75 per cent.
“The highly concessional nature of IDA Loans satisfies the requirements of the provision of Section 41(1)(a) of the Fiscal Responsibility Act, 2007, which states that government at all tiers shall only borrow on concessional terms with low interest rate and with a reasonably long amortisation period.
“The cost of IDA Loans, which is the Service Fee of 0.75 per cent, is considerably low thereby moderating the cost of debt service.
“The DMO wishes to state that Nigeria’s IDA’s Debt Stock as at June 30, 2021 was $11.7 billion. IDA loans represent one of the most favourable borrowing options for countries like Nigeria and is also consistent with the Medium Term Debt Management Strategy of the Federal Government,” the DMO noted.