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As of July 2023, Nigeria has an undisbursed World Bank loan amounting to approximately $8.25 billion, according to data obtained from the Summary Statement of Loans/Credit/Grants on the World Bank’s website.
Breaking down the figures, the undisbursed loans consist of $7.45 billion from the International Development Association (IDA) and $1.12 billion from the International Bank for Reconstruction and Development (IBRD). These loans encompass those that have been approved but not yet signed, as well as signed loan commitments.
The IBRD lends to governments of middle-income and creditworthy low-income countries, while the IDA provides concessional loans and grants to the world’s poorest countries.
This development follows previous reports suggesting that undisbursed loans could increase Nigeria’s debt to the World Bank from $12.72 billion to $21.15 billion, marking a 66.27 percent increase. These figures were based on the audited financial statements of the World Bank for fiscal year 2022, which indicated that as of June 30, 2022, the bank had not disbursed about $8.12 billion to Nigeria.
The World Bank explained that the delay in disbursing loans, especially signed loan commitments, is due to certain actions and document submissions required from borrowers and/or guarantors.
Data from the Debt Management Office revealed that Nigeria’s outstanding debt to the World Bank as of March 31, 2023, stood at $14.33 billion. This comprised a $13.84 billion IDA loan and a $488.35 million loan, as reported in the DMO’s external debt report.
The Federal Government of Nigeria recently announced its intention not to borrow from local or foreign organizations following the removal of petrol subsidies and exchange rate harmonization. However, it clarified that it would proceed with the loan requirements approved in the 2023 budget. The government aims to limit borrowing to capital expenditure rather than recurrent expenditure, emphasizing a commitment to finding alternative funding sources.
The Minister of Finance and Coordinating Minister for the Economy, Wale Edun, stated that the government would focus on borrowing for capital expenditure, which generates returns and is self-financing, while reducing borrowing for recurrent expenditure.
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