Nigeria contributes $26b of developing countries’ $7.8tr external debt

World Bank affirms rising debt burdens, warns govts on transparency
The World Bank Group, yesterday, estimated the external debt profile of developing countries at $7.8 trillion, but Nigeria has 0.33 per cent of the value.

According to data from the Debt Management Office, Nigeria’s external debt as at March 31, 2019, rose to $25.61 billion from $25.27 billion in the fourth quarter of 2018.

The multilateral lender, which affirmed that debt burdens are on the rise, said the total external debt of low and middle-income countries climbed 5.3 per cent to $7.8 trillion last year, while net debt flows (gross disbursements minus principal payments) from external creditors tumbled 28 per cent to $529 billion.

Although on the average external debt burden of low and middle-income countries was moderate, several countries have been on a deteriorating debt trajectory since 2009, the World Bank said.

The share of low and middle-income countries with debt-to-Gross National Income ratios below 30 per cent has shrunk to 25 per cent, down from 42 per cent 10 years ago, while the share of countries with high debt-to-export ratios has risen.

The World Bank Group President, David Malpass, said: “To grow faster, many developing countries need more investment that meets their development goals.

“Debt transparency should extend to all forms of government commitments, both explicit and implicit.

Transparency is a critical part of attracting more investment and building an efficient allocation of capital, and these are essential in our work to improve development outcomes.”

By the report, debt stocks were driven up by a 15 per cent jump in China, fuelled by investor appetite for renminbi-denominated assets.

Excluding the 10 largest external borrowers – Argentina, Brazil, China, India, Indonesia, Mexico, Russia, South Africa, Thailand, and Turkey, debt stocks rose four per cent.

Sub-Saharan countries, excluding South Africa, but led by Nigeria, saw debts stocks swell by eight per cent on the average in 2018, and over half the countries in the region have seen external debt stocks double since 2009.

A breakdown of DMO’s data showed that Nigeria is indebted to the tune of $11.25 billion under the Multilateral obligations, with the creditors being World Bank, African Development Bank, International Fund for Agricultural Development, among others.

It is also owing $3.2 billion under the Bilateral category, with China’ Export-Import Bank leading the pack, including France, Japan, Germany, and India’s Export-Import Bank.

Also, under the Commercial category, Nigeria’s Eurobond debt is estimated at $10.87 billion, followed by the Diaspora Bond at $300 million as at March 31, 2019.

Net debt inflows to low and middle-income countries from multilateral creditors surged 86 per cent, principally due to the International Monetary Fund’s support for Argentina.

Excluding that loan, net inflows from multilateral creditors to other low-and middle-income countries were unchanged from the previous year. But lending from non-Paris Club creditors to countries eligible to borrow from the World Bank’s International Development Association (IDA), its fund for the poorest countries, slowed.

The share of new commitments from non-Paris Club bilateral creditors fell to 17 per cent (a continued decline from 43 per cent in 2010), while the share held by Paris Club bilateral creditors remained steady at 12 per cent.

This edition of International Debt Statistics features for the first time a breakdown of public and publicly-guaranteed debt – government and other public sector debt, as well as private debt that is government guaranteed.

As a result, information is available not only about government debt, but also the explicit contingent liabilities of governments.

“Borrowing patterns and debt instruments have changed over time, and so has the depth and scope of International Debt Statistics.

“What has not changed is the core objective of the report: providing comprehensive, timely data on the external debt of low- and middle-income countries to support debt management and related policy decisions,” the World Bank Development Economics Data Group Director, Haishan Fu, said.

Bond issuance by low and middle-income countries – a primary source of external financing for some countries, fell 26 per cent to $302 billion in 2018 amid heightened global uncertainty, tighter capital markets, and credit ratings downgrades.

However, sub-Saharan countries, excluding South Africa, issued a record-high $17 billion in bonds, with the issues in 2018 characterised by longer maturities and oversubscribed.

Net financial flows to low- and middle-income countries – including both debt and equity – slipped 19 per cent in 2018 to $1 trillion.

Excluding China, which accounts for half of net debt flows and 43 per cent of net equity flows, net financial flows to low- and middle-income countries tumbled 28 per cent.