Developing Countries, Including Nigeria, Spend $443bn on Debt Servicing

In 2022, Nigeria and other developing countries collectively allocated $443.5 billion to service various external and publicly guaranteed debts, as revealed in the World Bank’s latest International Debt Report.

The report highlighted that debt-servicing payments, encompassing both principal and interest, observed a five percent increase across all developing nations compared to the previous year.

For the 75 countries eligible to borrow from the World Bank’s International Development Association (IDA), which primarily supports the poorest nations, the debt-servicing costs amounted to $88.9 billion in 2022. Additionally, interest payments from these countries experienced a significant quadrupling, reaching an unprecedented high of $23.6 billion from 2012 to 2022.

The report underscored a concerning trend, indicating that overall debt-servicing costs for the 24 poorest countries are anticipated to surge in 2023 and 2024, potentially escalating by up to 39 percent. This data signals potential challenges in managing and servicing debt obligations for these nations in the coming years.

World Bank Recommends End to Subsidy, Suggests Petrol Price Increase to N750/Litre

The World Bank has advised the Nigerian federal government to cease subsidy payments and increase the price of petrol to N750 per litre, asserting that current fuel prices in the country are not cost-reflective. The World Bank’s lead economist for Nigeria, Alex Sienaert, conveyed this recommendation during the Nigeria Development Update (NDU) presentation, December 2023 Edition.

Sienaert stated that the prevailing petrol prices do not fully align with market conditions, hinting at the possible resurgence of the subsidy. He estimated that the cost-reflective pricing for retail Premium Motor Spirit (PMS) should be around N750 per litre, surpassing the current N650 per litre.

The economist highlighted the importance of sustaining savings from the PMS subsidy reform on the fiscal front. The high cost of the gasoline subsidy, according to the NDU report, is adversely affecting Nigeria’s fiscal position, leading to an increase in deficit monetization through CBN Ways and Means financing, contributing to inflation.