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World Bank calls for debt relief as funds vanish from poor countries

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The World Bank’s top economist called on private lenders to shoulder some of the cost of debt forgiveness for the poorest countries, as record high repayments drain budgets that should be focused on health, education and infrastructure.

Interest payments alone by the lowest-income nations ballooned to a record $34.6 billion in 2023, quadrupling over the past decade, the bank said in its latest International Debt Report. Including principal, those 78 nations are paying $96.2 billion annually to service $1.1 trillion in debt.

More alarming, according to Chief Economist Indermit Gill, is that private lenders have pulled almost $13 billion more in service payments from those countries than they injected in new financing over the last two years. That burden is diverting funds from urgently needed investments at home, in areas from public health to climate change.

The World Bank’s latest warning caps a period of growing strain on the finances of poor countries, after a pandemic that forced higher spending and then a worldwide surge in interest rates that raised debt costs. Countries including Sri Lanka and Zambia have defaulted since Covid hit, while others like Pakistan and Kenya teetered on the brink — and international efforts to agree on a wider fix, including relief from private loans too, kept hitting snags.

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“It’s time to face the reality: the poorest countries facing debt distress need debt relief if they are to have a shot at lasting prosperity,” Gill wrote in the forward to the report released Tuesday. “Private creditors that make risky, high-interest loans to poor countries ought to bear a fair share of the cost when the bet goes bad.”

For all developing countries, including massive and stable economies such as China and India, total debt payments hit $1.4 trillion last year — including interest of $406 billion — on $8.8 trillion in debt. Over the past two years, that broader group has paid private investors $141 billion more than they’ve seen in new loans, according to the World Bank report.

“That reflects a broken financing system,” Gill wrote, adding that the idea hatched a decade ago that private capital could flood into poor countries to turbocharge development “proved to be a fantasy.”

Gill’s verdict comes as the bank’s president, Ajay Banga, has made one of his top priorities incentivizing more private capital to invest in development alongside multilateral lenders.

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The bank is also working with its sister institution, the International Monetary Fund, to steer countries in debt distress toward policies that bolster their finances and lower borrowing costs.

Many nations accumulated debt piles by borrowing heavily in the pre-Covid years when interest rates were low — especially from China and private lenders, which have grown to be significant creditors to poor countries. Problems escalated when the pandemic pushed governments into emergency spending, and then interest rates rose to fight post-Covid inflation.

The consequences are still playing out. A report by credit rating firm S&P Global in October predicted that “sovereigns will default more frequently on foreign currency debt over the next 10 years than they did in the past.”

The flight of private capital from emerging markets has continued this year. Investors using hard currencies such as dollars or euros have pulled roughly $13.6 billion from emerging-market debt funds in 2024, after withdrawing almost $23 billion the previous year, according to data from Bank of America.

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The biggest risks are concentrated among the 78 poorest countries categorized by the World Bank as eligible to receive low- or no-interest financing and grants from its International Development Association fund.

Many of those countries face “a metastasizing solvency crisis that continues to be misdiagnosed as a liquidity problem,” Gill wrote.

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Kalu Leads House Delegation to Ogun for Condolence Visit

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…eulogizes late Onanuga, ex-speaker Bankole’s mother

By Gloria Ikibah

Deputy Speaker of the House of Representatives, Rep. Benjamin Okezie Kalu, CON, has described the late Deputy Chief Whip, Rt. Hon. Adewunmi Oriyomi Onanuga, as an irreplaceable parliamentarian known for her vocal nature and friendly disposition.

Leading a delegation on behalf of the Speaker, Rep. Tajudeen Abbas, Kalu visited Sagamu, Ogun State, on a condolence mission to the late Onanuga’s family.

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Addressing the bereaved, he praised her dedication and influence, noting her unique presence in plenary sessions and unwavering support for her colleagues.

Kalu consoled her mother, Chief Mrs. Comfort Folashade Etutu, and her children, urging them to trust in God for comfort and strength. He assured the family of the House’s continued support and prayed against further untimely deaths in the household.

Earlier, Kalu led the delegation to Abeokuta for the fidau prayers of the late Mrs. Monsurat Atinuke Bankole, mother of former House Speaker Rt. Hon. Dimeji Bankole.

He lauded her sacrifices, which contributed to the success of her children, including the former Speaker’s contributions to the National Assembly.

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N800bn Inadequate for Nigeria’s Road Projects, Minister Umahi Tell Lawmakers

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By Gloria Ikibah

The Minister of Works, Dave Umahi, has described the N800 billion allocated to his ministry in the proposed 2025 budget as grossly insufficient to address Nigeria’s growing road infrastructure needs.

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Umahi stated this during the 2025 budget defence session held on Friday by the House Committee on Works, chaired by Rep. Akin Alabi.

Speaking candidly, Umahi called for an upward review of the ministry’s budgetary allocation, stressing that the current figure would barely make a dent in the nation’s road development agenda.

“We plead with you to help us. N800 billion cannot do anything for us. It cannot address our road needs, and so we plead with you to help us,” the Minister told the lawmakers.

Umahi who emphasised the importance of adequate funding to complete ongoing projects and initiate critical new ones across the country, also stressed that borrowing was a necessary step to bridge the infrastructure gap and stimulate economic growth.

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The Minister underscored the potential economic impact of infrastructure development, stating that it would create jobs and boost local economies.

“When the nation is in recession, you have to borrow money and invest in infrastructure. That is how you emerge from a recession. Infrastructure is a catalyst for economic activities, and this hunger we talk about will become a thing of the past,” he explained.

“Food sellers, sand suppliers, gravel workers, and others will benefit. Support Mr. President, and let’s borrow money to build infrastructure so Nigeria can be great again,” he added.

In response, Chairman of the Committee, assured Umahi that the committee would summon the Minister of Finance and the Head of the Budget Office to clarify the rationale behind the ministry’s limited allocation.

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The session also provided an opportunity for the Minister to address lawmakers’ concerns about the state of roads nationwide, with assurances that the government remains committed to completing ongoing projects.

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NASS Joint Committee Suspends Fire Service Budget Over Irregularities

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By Gloria Ikibah

The National Assembly Joint Committee on Interior has suspended the budget defence of the Federal Fire Service (FFS) following significant discrepancies in the agency’s 2024 budget performance and 2025 proposal.

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At a hearing chaired by Senator Adams Oshiomhole and his counterpart from the House, Chaired by Abdullahi Aliyu Ahmed, lawmakers flagged irregularities, including contradictory figures and inadequate documentation.

The committee uncovered discrepancies in the procurement of firefighting trucks, with similar units priced at N1.5 billion in one instance and N2.5 billion in another, despite being from the same supplier and of identical specifications.

The FFS Controller General, Jaji Abdulganiyu Idris, attributed the difference to variations in tanker sizes but failed to provide adequate supporting documentation.

Senator Oshiomhole criticized the inconsistencies, stating, “This reeks of over-padding or over-invoicing. Your written submission does not align with your explanation, and we cannot overlook this.”

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Lawmakers also raised concerns about unclear contract commitments and an outstanding payment of N603 billion for ongoing projects, which lacked proper specifications.

Oshiomhole emphasized fiscal responsibility, saying, “Every N10 wasted by MDAs adds up. Our duty is to ensure that every naira benefits Nigerians, especially the poor.”

The committee further queried the FFS over unverified revenue remittances. Idris presented manual receipts as evidence, but the lawmakers rejected them, demanding proper bank statements and confirmation from the Accountant-General’s office.

As a result, the committee stepped down the FFS budget defence, instructing the agency to rectify its submission. Oshiomhole warned, “Submit a revised presentation with accurate figures, or risk zero allocation in 2025.”

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The decision underscores the lawmakers’ commitment to accountability and efficient use of public funds, urging the FFS to address the issues promptly to secure its funding.

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