Nigeria and 121 other developing nations paid over $443.5 billion in interest on their public foreign debt in 2022, according to a recent World Bank analysis.
The Times reported that these nations spread across Europe, East and Central Asia, Latin America, North Africa, and Sub-Saharan Africa.
The world’s poorest nations are facing a debt crisis, according to the “International Debt Report 2023,” as borrowing becomes more expensive as a result of interest rate hikes in the US and Europe.
The chief economist and vice president of the World Bank, Indermit Gill, said in response to the report that “many countries are on a path to crisis due to record debt levels and high interest rates.”
Ghana defaulted on its debt in 2022, and Ethiopia is reportedly about to default on its creditors, according to reports this week.
According to the report, around 60% of low-income nations are either already experiencing or are likely soon to experience financial crisis.
It also mentioned that in the last three years, there have been more sovereign debt defaults in developing countries than there have been in the previous 20 years.
The research stated that the 75 poorest countries in the world paid $88.9 billion for debt service in 2022, a 5% rise from the previous year.
Ghana defaulted on its debt in 2022, and Ethiopia is reportedly about to default on its creditors, according to reports this week.
According to the report, these nations spent more on debt repayment than they did on funding vital development areas like the environment, health, and education.
For instance, Nigeria’s total spending on education and health in 2022 was N821.5 billion and N875.93 billion, respectively, while the country spent almost N5.65 trillion paying its debt.
The debt picture for the world’s poorest 24 countries in 2024 is particularly dire since it is predicted that their combined debt service will increase by 39% between 2023 and 2024.
“Every quarter that interest rates stay high results in more developing countries becoming distressed—and facing the difficult choice of servicing their public debts or investing in public health, education, and infrastructure,” stated the World Bank’s V.P. in reference to the rising debt service.
The root of these developing nations’ dire economic outlook might be traced to a decline in export revenue and a high US dollar.
For instance, since June, the value of the naira has dropped by more than 50%, making it more difficult to service debts denominated in USD from abroad.
