According to a report released on Wednesday by the World Bank, the poorest countries eligible to borrow from the World Bank's International Development Association (IDA) now spend more than a tenth of their export revenues to service their long-term, publicly guaranteed external debt.
According to the report, Nigeria's external debt was $18.8 billion in 2010 but increased to $76.2 billion last year. In 2010, $2.58 billion was obtained through IMF credit and Special Drawing Rights (SDR), compared to $9 billion in 2021.
Nigeria and other low- and middle-income economies had a total external debt of $9 trillion at the end of 2021. According to the World Bank, this is more than double what it was a decade ago.
The World Bank explained that rising interest rates and slowing global growth are putting a large number of countries at risk of entering debt crises. "Approximately 60% of the poorest countries are already at high risk of debt distress or are already in distress," it stated.
At the end of 2018, $46.2 billion in debt-service payments on long-term public and publicly guaranteed external debt were tied to IDA-eligible countries, but this figure is expected to rise to $62 billion by 2022.
According to the report, IDA-eligible countries' debt-service payments on long-term public and publicly guaranteed external debt will total $46.2 billion by the end of 2021, equivalent to 10.3% of their exports of goods and services and 1.8% of their GDP.
"These percentages were significantly higher than in 2010, when they were 3.2% and 0.7%, respectively." The debt-service payments on IDA countries' public and publicly guaranteed debt are expected to rise by 35% to more than $62 billion in 2022, one of the highest annual increases in the last two decades.
"China is expected to account for 66% of IDA countries' debt service payments on their official bilateral debt."
World Bank Group President David Malpass commented on rising debt service, saying, "The debt crisis confronting developing countries has intensified," adding that "a comprehensive approach is required to reduce debt, increase transparency, and facilitate faster restructuring—so countries can focus on spending that supports growth and reduces poverty."
"Without it, many countries and governments will face a fiscal crisis and political instability, and millions of people will fall into poverty."
