The World Bank has invested $17bn of the $51bn provided by multilateral institutions to support low- and middle-income countries facing a growing debt crisis.
The lender said the COVID-19 pandemic exacerbated the debt burdens of developing nations, and the subsequent rise in global interest rates has made it even harder for many to recover.
The global bank made this disclosure in its report titled, “2024 Key Development Challenges in Nine Charts: How the World Is Off-Track to Reduce Poverty,” with the link posted on its official X (formerly Twitter) account on Monday.
By the end of 2023, the total external debt owed by low- and middle-income countries had reached a record $8.8tn, an eight per cent increase from 2020, the World Bank revealed.
It added that interest payments on these debts surged by nearly a third to $406bn, limiting countries’ ability to invest in critical sectors such as healthcare, education, and environmental sustainability.
“The COVID-19 pandemic sharply increased the debt burdens of all developing countries—and the subsequent surge in global interest rates has made it harder for many to regain their footing,” the World Bank stated.
In response to this mounting debt crisis, the World Bank said it stepped in alongside other multilateral institutions, with a focus on improving debt transparency and sustainability.
“Since 2022, the World Bank and other multilateral institutions have invested nearly $51bn more than we collected in debt-service payments from IDA-eligible economies, with the World Bank accounting for a third of that sum,” the bank noted.
The third sum is the one-third of the $51bn, which is the portion contributed by the World Bank, amounting to $17bn.
Nigeria is currently an International Development Association-eligible country.
Although Nigeria is one of Africa’s largest economies, it qualifies for IDA assistance due to its relatively low Gross National Income per capita, which meets the IDA eligibility criteria.
The bank said that as of 2024, over one-third of people in IDA-eligible countries and more than half of those in Sub-Saharan Africa are experiencing multidimensional poverty, highlighting the persistent development challenges these regions face.
Earlier this month, the World Bank highlighted the global community’s reaffirmed commitment to the IDA, which offers concessional lending to 78 low-income countries.
The 21st replenishment of IDA raised $23.7bn, which will support development efforts in these countries from 2025 to 2028.
The World Bank explained that IDA’s leveraging model would generate an estimated $100bn in affordable financing, aimed at creating jobs, improving healthcare and education, expanding electricity access, and enhancing food security.
