Nigeria has been listed among the top three countries holding nearly one-third of all debt owed by nations eligible for International Development Association (IDA) support, according to the World Bank’s newly released International Debt Report 2025.
The report shows that Nigeria, Bangladesh, and Pakistan now jointly account for almost 30% of all external debt taken by low-income and vulnerable economies. The revelation has intensified concerns over Nigeria’s rapidly rising debt burden and its long-term financial stability.
Debt Levels Becoming “Worryingly High”
Experts have repeatedly warned that Nigeria’s public debt is moving dangerously close to unsustainable levels. The country’s total public debt climbed to ₦152.39 trillion in Q2 2025, up from ₦149.38 trillion in the first quarter.
According to the Debt Management Office (DMO), Nigeria’s external debt rose to $46.98 billion (₦71.85 trillion) by June 2025, compared to $45.98 billion (₦70.63 trillion) recorded in March. Debt servicing also surged, with Nigeria paying $932.1 million in the second quarter of 2025 alone.
How the Debt Is Structured
The World Bank report highlights that long-term public and publicly guaranteed (PPG) loans still dominate the borrowing patterns of IDA countries, accounting for 75% of their total debt. Private sector loans without government guarantees (PNG) make up the remaining 25%.
In 2024, PPG debt rose by 2.8%, hitting $816.5 billion, while PNG debt slightly declined to $241.9 billion.
The report also notes a worrying trend: only seven of the ten biggest borrowers now hold more than half of all IDA-eligible external debt, showing increasing concentration and higher vulnerability.
Short-Term Borrowing on the Rise
Net debt inflows to IDA countries grew by 18.6% to $53.1 billion in 2024. However, this increase was largely due to a sudden shift in short-term loans, which swung from an outflow of $10.6 billion in 2023 to an inflow of $5.6 billion in 2024.
Long-term borrowing dropped by 14.4%, with the World Bank noting that for the first time since 1999, commercial banks and private lenders posted negative net flows to private borrowers.
What This Means for Nigeria
Being among the top three IDA borrowers heightens fears over Nigeria’s ability to manage future repayments, especially during periods of oil price shocks or global financial instability.
According to the World Bank, Nigeria urgently needs:
- stronger debt transparency,
- more responsible borrowing, and
- improved domestic revenue generation.
Economists warn that if the trend continues, more of Nigeria’s budget will go into debt repayments, leaving fewer resources for critical sectors such as education, healthcare, and infrastructure.
