ACCORDING to the World Bank, the debt service suspension initiative could have saved Nigeria $342.1 million between January and December 2021.
This was revealed in a brief on the bank’s Debt Service Suspension Initiative, which was updated this month on the bank’s website.
Official creditors agreed to suspend all principal and interest payments for a set period of time under the DSSI.
In its brief, the World Bank estimated how much money different countries, including Nigeria, could save if creditors suspended payments on all principal and interest for a year.
According to the brief, Nigeria, despite being eligible, declined to participate in the initiative, which could have saved the country 0.1 percent of its GDP.
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.
The World Bank provided justification for countries that were not yet beneficiaries of the DSSI in a separate document titled Debt Report 2021 Edition II, which was published in April of last year.
The reports also revealed that although some countries were eligible for the DSSI, they chose not to participate for a variety of reasons.
Among the reasons given were sending mixed signals to bondholders and other private creditors.
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 also revealed that the debt service suspension initiative could have saved Nigeria $432.6 million between May 2020 and December 2020.
Also on the data obtained from the Debt Management Office, Nigeria spent N2.49 trillion on debt servicing payments in the first nine months of 2021.
It also spent N612.71 billion on domestic debt servicing between January and March 2021, and $1 billion (N410.83 billion) on external debt servicing, totaling N1.02 trillion.
The country spent N322.7 billion on domestic debt servicing and $299 million (N122.83 billion) on external debt servicing from April to June 2021, totaling N445.53 billion.
Nigeria spent N1.02 trillion on debt servicing from July to September 2021, with N808.49 billion spent on domestic debt servicing and $520.78 million (N213.95 billion) spent on external debt servicing.
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