The debt burden of the world’s 47 low-income countries, including Nigeria, rose 12 percent to a record level of $860 billion in 2020.
This is according to a new report released at the ongoing hybrid annual meetings of the World Bank/International Monetary Fund (IMF) in Washington DC on Monday
The bank observed that governments around the world responded to the COVID-19 pandemic with massive fiscal, monetary, and financial stimulus packages.
This is as the International Finance Corporation (IFC), a member of the World Bank Group, ranked Nigeria sixth among the top 10 countries with the highest exposure to funds and support.
The IMF added that while these measures were aimed at addressing the health emergency, cushioning the impact of the pandemic on the poor and vulnerable, and putting countries on a path to recovery, the resulting debt burden of the world’s low-income countries rose 12 percent in 2020.
Part of the report reads: “World gross domestic product (GDP) fell by an estimated 4.3 percent in 2020 — the sharpest contraction of output since the Great Depression. Developed economies were most severely impacted by the pandemic, and output is estimated to have shrunk by 5.6 percent in 2020.
“Low-and middle-income countries experienced a relatively less severe contraction, with output estimated to have contracted by 2.5 percent in 2020.
“Even prior to the pandemic, many low- and middle-income countries were in a vulnerable position, with slowing economic growth and public and external debt at elevated levels. External debt stocks of low-and middle-income countries combined rose 5.3 percent in 2020 to $8.7 trillion.”
World bank also noted that, in Sub-Saharan Africa, both Ghana and Nigeria recorded a 17 percent increase in external debt stocks driven by purchases from the IMF of $1 billion and $3.4 billion, respectively, plus in Ghana, the $3 billion pre-pandemic Eurobond issue, and for Nigeria, a 16 percent rise in the nonguaranteed debt of the private sector.
David Malpass, president of the World Bank Group, said an encompassing approach to managing debt is needed to help low- and middle-income countries assess and curtail risks and achieve sustainable debt levels.
“We need a comprehensive approach to the debt problem, including debt reduction, swifter restructuring, and improved transparency. Sustainable debt levels are vital for economic recovery and poverty reduction,” Malpass said.
“The deterioration in debt indicators was widespread and impacted countries in all regions. Across all low- and middle-income countries, the rise in external indebtedness outpaced Gross National Income (GNI) and export growth.
“Low- and middle-income countries’ external debt-to-GNI ratio (excluding China) rose to 42 percent in 2020 from 37 percent in 2019 while their debt-to-export ratio increased to 154 percent in 2020 from 126 percent in 2019.”
Meanwhile, International Finance Corporation (IFC), a member of the World Bank Group, has ranked Nigeria sixth among the top 10 countries with the highest exposure to funds and support.
According to the report, India led the list of countries with a benefit of $6.91 billion, representing 10.77 percent of the global portfolio as at June 2021.
It stated further that China benefited with $4.75 billion, accounting for 7.40 percent while Turkey’s $4.44 fund billion accounted for 6.92 percent.
Brazil, on the other hand, was fourth with a benefit of $3.68 billion, accounting for 5.75 percent, while South Africa was fifth with a benefit of $2.49 billion, accounting for 3.89 percent.
Nigeria was sixth with a benefit of $2 billion, accounting for 3.12 percent, while Colombia was seventh with a benefit of $1.76 billion, accounting for 2.75 percent.
Vietnam came eighth with a benefit of $1.67 billion, accounting for 2.60 percent; Mexico was ninth with a benefit of $1.59 billion, accounting for 2.48 percent; and Indonesia was tenth with a benefit of $1.53 billion, accounting for 2.38 percent.