The Office Of Debt Management In Nigeria Replies World Bank

The Office Of Debt Management In Nigeria Replies World Bank
The Office Of Debt Management In Nigeria Replies World Bank

 

Debt Management Bureau, DMO, received the World Bank report which marked Nigeria as a high debt risk nation DMO has completely disappeared from the report and liberated Nigeria from nine other countries worldwide on the list Global Apex Bank ranked Nigeria fifth among ten other nations as top world debt.

The assessments were included in the findings of 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.

According to a statement released to journalists in Abuja yesterday, the DMO noted that the World Bank’s report was an assessment of IDA’s performance and not the performance of IDA loans following the debt repayment capacity of the beneficiaries.

Meanwhile, the Debt Management Office directly referred to IDA / World Bank records as false and misleading, stressing that it provides an inadequate understanding of the structure of the report.

The statement emphasizes that the global Apex Bank, through IDA, provides concession loans to the poor in developing countries to help them achieve improvements and growth in various areas.

These areas include jobs, poverty reduction, governance, environment, climate adaptation and resilience, human capital, infrastructure, and debt transparency The Debt Management Bureau has noted the importance of reiterating the position of the World Bank, adding that some newspapers have misrepresented their IDA report in Nigeria.

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The DMO stated that it only focused on the composition of IDA’s loan portfolio and neglected to reference the debt sustainability of the top ten beneficiary countries.

As mentioned in the previous publication, countries listed as the top five high-debt risk nations include India, Pakistan, Nigeria, Kenya, and Ghana, which the newspaper incorrectly describes as ‘high-debt risk nations’.

In parts, the DMO statement further stated that IDA loans are typically for tenors of 30-40 years, a grace period (moratorium on principal payment) of 7-10 years, and service costs of only 0.75 percent.

The Office also stated that the highly concessional nature of IDA lending, according to the DMO, complies with the requirements of the provision of Section 41 (1) (a) of the Fiscal Responsibility Act, 2007.

The section mentioned above states that the government at all levels can only borrow with concession terms with a low-interest rate and a reasonably long amortization period The statement revealed that the cost of IDA loans, which is the service fee of 0.75 percent, is significantly lower, thereby moderating the cost of debt service; the aim is to reduce the financial weight of loans.

Also, the DMO wants to say that Nigeria’s IDA’s debt share as of June 30, 2021, was $ 11.7 billion It noted that IDA lending throughout the debt profile represents one of the most affordable lending options for countries like Nigeria and is also consistent with the Federal Government’s medium-term debt management strategy.

Here is a summary of every report on World Bank Rating Nigeria number five among ten other countries with high debt risk:

Of the countries among the top 10 ranked with high debt risk exposure worldwide, Nigeria is currently number 5, estimated at $ 11.7 billion In addition, we collected that the World Bank disbursed $ 19.54 billion in loans to Nigeria.

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The bank has already approved $ 1.46 billion in unsecured loans, with a $ 6.61 billion loan commitment and $ 11.47 billion outstanding payments The ranking is among another top globally recognized debts. In order of appearance, India owes an overwhelming sum of $ 22 billion, followed by Bangladesh- $ 18.1 billion, Pakistan- $ 16.4 billion, Vietnam- $ 14.1 billion, then Nigeria.

Number 6 is Ethiopia with $ 11.2 billion, Kenya- $ 10.2 billion, Tanzania, $ 8.3 billion, Ghana, $ 5.6 billion, and Uganda, $ 4.4 billion According to the World Bank, ‘the fiscal year 2021, FY21 financial document, published by the International Development Association, IDA, back on June 30, the ten countries with the highest exposures accounted for 66% of IDA’s total debt exposure.’

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IDA, the World Bank’s financial institution that offers concession loans and subsidies to the poorest developing countries, has indicated that the single borrower limit, SBL, for FY22, has been set at $ 45 billion, which is 25 percent of $ 180.9 billion of capital from $ 30.9 billion. June 2021, marginally higher than FY21.

In order to reach the total estimates of the IDA, the bank has revealed that monitoring these charges relative to the SBL requires consideration of the repayment profiles of existing loans and payout profiles and provides for new loans and guarantees.

IDA said it would “agree to return the debt relief for future compensation to members for forgotten refluxes, ensuring that the process does not reduce IDA’s financial capacity.”

However “To be eligible for a debt relief loan with IDA, it is necessary to maintain macroeconomic stability, implement important structural and social reforms and maintain all loans in accumulation status.”