Why Nigeria is not getting concessional loans ― World Bank

President of the World Bank, David Malpass, said the institution was no longer extending concessional loans to Nigeria because the country was already heavily indebted.

This conclusion by the World Bank contradicts the position of Federal Government officials who insist that the nation’s foreign debt was still within the threshold of 25 per cent of GDP “far lower than the 55 per cent threshold of debt to GDP set by the World Bank.”

Minister of Finance, Zainab Ahmed had told the National Assembly last week that the country was borrowing from China and other commercial sources because it found it difficult to access loans from concessionary sources.

According to her, when in its bid to shore up revenue to boost infrastructure, Federal Government approached the World Bank for loans the institution advanced Nigeria $400 loan after a long period of waiting.

Speaking at a World Bank-International Monetary Fund debt forum in Washington on Monday, Malpass accused African Development Bank (AfDB), Asian Development Bank, and the European Bank for Reconstruction and Development of contributing to debt problems.

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He said those institutions were lending too quickly to heavily indebted countries, which was worsening already-challenging debt situations.

“We have a situation where other international financial institutions and to some extent development finance institutions as a whole, certainly the official export credit agencies, have a tendency to lend too quickly and to add to the debt problem of the countries.”

The World Bank chief explained that while Asian Development Bank was pushing billions of dollars into a fiscally challenging situation in Pakistan, AfDB was doing the same in Nigeria and South Africa.

He called for better collaboration among international financial institutions to coordinate lending and maintain high standards of transparency.

“And so we have a very real problem of the IFIs themselves adding to the debt burden and, and there’s pressure then I think on the IMF to sort through it and look at the best interest for the country,” he said.

Malpass later cited liens against Angola’s oil revenues associated with Chinese debt that were hidden by non-disclosure agreements, convenient for politicians and contractors in an interview with reporters.

“Let the people of the country see what the terms of the debt are as their government makes commitments,” Malpass said.

The International Development Association, an arm of the World Bank will on July 1, begin implementing a new set of lending rules when it unlocks a new round of funding expected to make some $85 billion in loans and grants available.

These rules will expectedly set new standards for transparency and require coordination with other multilateral lenders working with the same country.

Debt Management Office (DMO) and National Bureau of Statistics (NBS) put Nigeria’s total public debt at N26.14 trillion as at September 2019 while the DMO has concluded arrangements to float another $3 billion Eurobond to support the budget.