The World Bank cautioned Nigeria and other developing economies about dwindling foreign investment due to rising debt and weak growth prospects, urging urgent reforms.
The bank reported that global debt has surged nearly 25% since the COVID-19 pandemic, pushing low-income countries, including Nigeria, into a “doom loop” of high interest rates and ballooning debts. Nigeria owes approximately $17.32 billion to the World Bank, with $16.84 billion to the International Development Association and $485 million to the International Bank for Reconstruction and Development as of early 2025.
The World Bank highlighted that Nigeria’s proposed $21.5 billion external borrowing plan for infrastructure exacerbates its debt burden. Interest payments for developing nations have doubled, rising from under 9% of revenues in 2007 to 20% in 2024, signaling a public finance crisis.
Global GDP growth forecasts for 2025 have been downgraded to 2.2%, with high interest rates in advanced economies—averaging 3.4%—further straining debt-laden countries. The bank criticized the outdated global debt architecture, calling for faster restructuring and fiscal consolidation to curb reliance on domestic borrowing.
To avert a financial crisis, the World Bank recommended prudent debt-to-GDP thresholds—40% for low-income countries like Nigeria—and trade-friendly reforms to boost private sector growth, warning that continued debt accumulation risks a 50% chance of economic collapse.
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