By Juliet Ezeh
Nigeria’s debt to the World Bank’s concessional lending arm, the International Development Association (IDA), surged to $18.7 billion as of December 31, 2025, reflecting a $1.9 billion increase over the previous year, according to newly released data.
The IDA Management’s Discussion and Analysis report shows that Nigeria’s exposure grew from $16.8 billion at the end of 2024, marking an 11.3 percent year-on-year rise. Analysts say the increase underscores the country’s growing reliance on multilateral concessional financing to navigate a tightening fiscal space amid global economic uncertainties.
The figures place Nigeria as the third-largest borrower in the IDA portfolio, trailing only Bangladesh ($23.0 billion) and Pakistan ($19.4 billion) among the ten countries with the highest exposures, which together account for 60 percent of IDA’s total portfolio.
The $1.9 billion uptick largely reflects ongoing project disbursements under Nigeria’s Country Partnership Frameworks, with expanded commitments in health, education, and infrastructure sectors. While IDA loans offer favourable terms with long maturities and grace periods, the growing debt adds to Nigeria’s external obligations.
IDA noted the importance of monitoring exposures in relation to repayment schedules and projected new loans. The institution’s overall portfolio rose to $226.4 billion as of December 31, 2025, from $205.8 billion a year earlier, reflecting an expansion of concessional financing through a hybrid model combining member contributions and market borrowings.
As the largest African client, Nigeria’s exposure surpasses other major recipients like Ethiopia and Tanzania, reaffirming its prominence in the World Bank’s concessional financing framework. Besides IDA, the International Bank for Reconstruction and Development (IBRD), the World Bank’s lending arm for middle-income countries, also provides sovereign loans and guarantees for development programs.
According to Nigeria’s Debt Management Office, the country’s external debt stood at $46.98 billion as of June 30, 2025, with the World Bank holding $19.39 billion, including $18.04 billion from IDA and $1.35 billion from IBRD representing 41.3 percent of total external debt.
Economist and CEO of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, noted that the rising IDA commitments should be assessed within the context of Nigeria’s Medium-Term Expenditure Framework and annual budgets, which already account for domestic and foreign borrowing.
“Deficit financing is common globally and can help governments fund critical investments without waiting to generate all revenue upfront,” Yusuf said. He, however, warned that borrowing must be backed by sound economic reasoning and clear development priorities, stressing that debt sustainability depends primarily on Nigeria’s revenue capacity to service obligations.
He cautioned that without sufficient cash flow, Nigeria risks entering a cycle of borrowing to repay existing loans, which could exacerbate fiscal vulnerability. Yusuf also highlighted the risks of excessive foreign borrowing, including exchange rate pressures and potential depletion of reserves, advising a disciplined approach to debt management.
Juliet Ezeh is the founder and chief reporter at Westbridge Reporters with over 7 years of experience in journalism. She covers crime, industry, policy, and social developments, delivering timely and accurate reporting.