The World Bank has said that Nigeria and other developing countries are facing debt crisis, noting that the situation has intensified.
David Malpass, World Bank Group President, disclosed this in a statement titled, ‘Debt-Service Payments Put Biggest Squeeze on Poor Countries Since 2000’ on Tuesday.
According to the World Bank, its new International Debt Report revealed a rising debt-related risk for all developing economies — low- as well as middle-income economies.
Speaking to this, Malpass said, “The debt crisis facing developing countries has intensified. A comprehensive approach is needed to reduce debt, increase transparency, and facilitate swifter restructuring—so countries can focus on spending that supports growth and reduces poverty.
“Without it, many countries and their governments face a fiscal crisis and political instability, with millions of people falling into poverty.”
The Washington-based bank stated that the poorest countries eligible to borrow from its International Development Association now spent over a tenth of their export revenues to service their long-term public and publicly guaranteed external debt.
It said at the end of 2021, the external debt of these economies totalled $9tn, more than double the amount a decade ago with the total external debt of IDA countries nearly tripling to $1tn.
It said, “Rising interest rates and slowing global growth risk tipping a large number of countries into debt crises. About 60 per cent of the poorest countries are already at high risk of debt distress or already in distress.
“At the end of 2021, IDA-eligible countries’ debt-service payments on long-term public and publicly guaranteed external debt totaled $46.2bn — equivalent to 10.3 per cent of their exports of goods and services and 1.8 per cent of their gross national income, according to the report.”
Similarly, the World Bank Public Finance Review report has warned the Federal Government against disregarding Section 38 of the CBN Act, which limits borrowings to 5 per cent of the previous year’s revenue.
