Nigeria World Bank debt climbs to $18.7bn as IDA exposure jumps $1.9bn in a year, raising concerns over debt sustainability and fiscal pressure

Nigeria’s debt to the concessional lending arm of the World Bank, the International Development Association, rose sharply by $1.9bn within a year to reach $18.7bn as of December 31, 2025, according to new financial data released by the institution.

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The figures, contained in the IDA Management’s Discussion and Analysis for the period ended December 31, 2025, show that Nigeria’s exposure increased from $16.8bn at the end of 2024, representing an 11.3 per cent year-on-year rise.

The surge underscores Nigeria’s growing reliance on multilateral concessional financing as the Federal Government grapples with tightening fiscal space and global market volatility.

The latest data position Nigeria as the third-largest borrower in the IDA portfolio, behind Bangladesh with $23.0bn and Pakistan with $19.4bn.

Collectively, the top 10 borrowing countries account for 60 per cent of IDA’s total exposure, slightly down from 61 per cent a year earlier.

The $1.9bn increase largely reflects ongoing project disbursements under Nigeria’s Country Partnership Frameworks and expanded commitments in critical sectors including health, education and infrastructure.

While IDA financing offers long maturities and grace periods on highly concessional terms, the rising stock of Nigeria World Bank debt adds to the country’s external obligations.

In its report, the IDA emphasised the need to monitor exposures in line with repayment and future disbursement profiles.

“Monitoring these exposures relative to the SBL requires consideration of the repayment profiles of existing loans, as well as disbursement profiles and projected new loans and guarantees,” the institution stated.

The rise in Nigeria’s borrowing coincides with broader expansion across IDA’s portfolio.

Net loans outstanding climbed to $226.4bn as of December 31, 2025, up from $205.8bn a year earlier, reflecting a scaling up of concessional resources under the lender’s hybrid financing model.

Beyond the IDA, Nigeria also accesses funding from the International Bank for Reconstruction and Development, another arm of the World Bank Group that raises funds on global capital markets through its AAA rating to support middle-income and creditworthy lower-income countries.

As of June 30, 2025, Nigeria’s external debt stood at $46.98bn, according to the Debt Management Office.

Of that amount, the World Bank Group accounted for $19.39bn, comprising $18.04bn from IDA and $1.35bn from the International Bank for Reconstruction and Development.

This places the World Bank’s share at 41.3 per cent of Nigeria’s total external debt, reinforcing its prominent role in financing development programmes.

Economist and Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said rising commitments from the World Bank should be assessed within the framework of Nigeria’s Medium-Term Expenditure Framework and annual budgets.

Dr Yusuf noted that deficit financing is a common fiscal tool globally and not inherently problematic, provided borrowing is guided by sound economic reasoning and clear development priorities.

However, Dr Yusuf warned that debt sustainability remains the critical issue. Without strong revenue growth to service obligations, Nigeria risks a vicious cycle of borrowing to repay existing loans, thereby deepening fiscal vulnerability.

Dr Yusuf also cautioned against excessive foreign borrowing due to exchange-rate risks, arguing that domestic debt is generally easier to manage.

Heavy reliance on foreign loans, he said, could exert pressure on reserves and weaken the naira.

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With Nigeria World Bank debt now at $18.7bn, the trajectory of concessional borrowing is likely to remain under intense scrutiny as policymakers balance development needs against long-term fiscal stability.