The World Bank says Nigeria could have saved about $342.1m from January to December 2021 through the debt service suspension initiative.
It disclosed this in a brief on Debt Service Suspension Initiative updated this month by the bank on its website.
Under the DSSI, official creditors commit to suspending payments of all principal and interest within a stipulated period of time.
The World Bank, in its brief, provided an estimate of what different countries, including Nigeria, could save if creditors suspended payments on all principal and interests within a period of 12 months.
However, Nigeria, although eligible, opted out of this initiative, which could have led to saving 0.1 per cent of its Gross Domestic Product, according to the brief.
Despite being one of the largest World Bank borrowers, Nigeria is not covered by the Joint Bank-Fund Debt Sustainability Framework for Low-Income Countries.
In a separate document published in April last year by the World Bank – the Debt Report 2021 Edition II – the bank provided a justification for countries that were not yet beneficiaries of the DSSI.
The report said that although some countries were eligible for the DSSI, they had chosen not to participate for a number of reasons.
Some of the reasons included conveying wrong signals to bondholders and other private creditors, among others.
The report had said, “Some DSSI-eligible countries have thus far elected not to participate. Currently, 27 DSSI-eligible countries, 37 per cent of eligible countries, are not participating in the initiative for a variety of reasons.
“Some fear participation may convey the wrong signal to bondholders and other private creditors while others note the amount of eligible bilateral debt service was negligible, and savings do not justify the administrative expenses incurred by the deferral.
“Because the DSSI only defers payment to a later date, some policymakers worry longer-term debt sustainability may be sacrificed for short-term financial flexibility.”
The World Bank disclosed that Nigeria could have saved about $432.6m from May 2020 to December 2021 through the debt service suspension initiative, The PUNCH had reported.
Nigeria spent N2.49tn on debt servicing payments in the first nine months of 2021, according to the data obtained from the Debt Management Office.
Between January and March 2021, Nigeria spent N612.71bn on domestic debt servicing, while it spent $1bn (N410.83bn) on external debt servicing, giving a total of N1.02tn.
From April to June 2021, the country spent N322.7bn on domestic debt servicing and $299m (N122.83bn) on external debt servicing, showing a total of N445.53bn.
From July to September 2021, Nigeria spent N808.49bn on domestic debt servicing and $520.78m (N213.95bn) on external debt servicing, giving a total of N1.02tn.
