According to a new report from the World Bank, Nigeria and other developing countries have collectively spent approximately $441 billion on debt servicing over the past four decades. The report also revealed that in 2022, Nigeria received $2.9 billion, making it the top recipient of fresh loans from the World Bank, followed by Tanzania with $2.7 billion in the same year.
The World Bank’s International Debt Report for 2023 cautioned that the surge in global interest rates posed a risk of debt crises for the poorest countries. The report highlighted that developing countries faced record debt-servicing costs, reaching $443.5 billion in 2022. The rise in borrowing costs diverted crucial resources away from essential areas such as education, health, and the environment.
The statement from the World Bank emphasized the impact of rising interest rates on the vulnerability of developing nations to debt. It noted a quadrupling of interest payments by the 75 countries eligible to borrow from the International Development Association, reaching an all-time high of $23.6 billion in 2022. The report also projected a potential 39% increase in overall debt-servicing costs for the 24 poorest countries in 2023 and 2024.
The World Bank highlighted the challenges posed by a stronger US dollar on debt service payments for developing countries, making it more expensive to meet financial obligations. The report called for quick and coordinated action by debtor governments, private and official creditors, and multilateral financial institutions to address the situation, emphasizing the need for transparency, better debt sustainability tools, and swifter restructuring arrangements to prevent another lost decade.