A former World Bank chief has warned that Nigeria’s reliance on opaque debt arrangements could undermine the country’s fiscal credibility and trigger a market backlash.
The criticism comes as domestic liquidity conditions tighten, with cash outside banks dropping by N485.80 billion in 2026 to hit a seven-month low.
The lender has noted that governments with fundamentally sound balance sheets can still default if they lack the immediate liquidity to service obligations.
The warning underscores growing investor scrutiny of how African sovereigns are structuring their borrowing.
While the World Bank has previously characterized Nigeria’s fiscal challenges as a revenue shortfall rather than an unsustainable debt burden, concerns persist over the transparency of recent financing deals.
The lender has noted that governments with fundamentally sound balance sheets can still default if they lack the immediate liquidity to service obligations.
The decline in cash outside banks signals a contraction in the monetary base, potentially reflecting tighter credit conditions or reduced confidence in the banking system.