Reference to Promissory notes related to oil.
africanews.org
Nigeria Makes Efforts to Keep Down Foreign Debt
December 31, 1997
Goddy Ikeh, PANA Correspondent
LAGOS, Nigeria (PANA) - Nigeria, Africa's leading oil producer is taking steps to reconcile its foreign debt, which officials
concede, threatens the country's welfare and poverty alleviation efforts.
While government officials put the total debt stock at 27.012 billion U.S. dollars as of June 30, 1997, international finance
organisations tend to disagree, with the World Bank saying it is over 34 billion dollars.
Local officials claim that the World Bank is not up to date with its own calculation. They say, for instance, that the bank has
ignored the fact that Nigeria no longer owes Ireland, Sweden and Norway, to which the books had ascribed outstanding
credits of some 32.8 million dollars.
They also argue that penalty waiver had been recorded from some creditors on unpaid interests and the buy-back of 2.2 billion
dollars owed to Russia.
In addition, the officials argue that there has been cumulative reduction in the value of promissory notes from 4.2 billion dollars
to 2.6 billion dollars and the rejection of 1.2 billion dollars worth of private debts which did not meet the criteria and time frame
for incorporation into the national debt list.
Nigeria's debt conversion programme introduced in 1988 is also credited to have eliminated some 740.092 million dollars,
while about 700 million dollars worth of unused loans had been cancelled, the officials said.
Finance Minister Anthony Ani believes the country's current debt sum is acceptable to officials of both the Nigerian Central
Bank, the World Bank and the International Monetary Fund (IMF).
Speaking after a meeting in October with officials of these multilateral finance institutions in Washington, Ani maintained that the
analysis by officials of his ministry showed that the figures of the principal and interest arrears as at June 1997, were slightly
higher that those obtained by the staff of the World Bank and the IMF from the secretariat of the Paris Club.
The difference in the figures of arrears ... supplied by our team and those by the fund/bank team was largely accounted for by
payments in the pipeline in Nigeria and exchange rates fluctuations, the minister added.
Although Ani is happy with the achievement recorded so far in Nigeria's debt management, he, however, insists that the debt
overhang remained overwhelming.
At 270 dollars per head, Nigeria's external indebtedness is 55 dollars higher than the country's income per head currently put at
215 dollars.
As part of measures to ameliorate the debt burden, Ani said the government had placed an embargo on new external loans until
the debt crisis was brought under firm control.
Since this crisis hit the country some 15 years ago, some 1.2 billion dollars had been spent on compilation and verification of
the debt stock, alone.
The bulk of the real debts are owed the London and the Paris Clubs as well as the World Bank group, the African
Development Bank, the European Investment Bank and the International Fund for Agricultural Development.
According to T.A. Iremiren, a director in the Nigerian Finance ministry, a 30-year rescheduling agreement has been reached
with the London Club, which matures in 2020, while the interest of 128 million dollars on the debt stock is regularly being
serviced.
But the same cannot be said of Paris Club, which is owed some 19.9 billion dollars, the officials said.
Explaining the situation, the governor of Nigeria's Central Bank, Paul Ogwuma, said the problem was with the Paris Club to
which the country has not made any debt service payment since 1993.
The Paris Club has rebuffed Nigeria's overtures on reaching terms that would engender debt reduction for the country,
Ogwuma argued.
But like most Nigerians, the bank governor is unhappy with the way and manner these loans were disbursed and managed in
the country.
A 1996/97 nationwide survey jointly carried out by officials of the finance ministry and the central bank, showed that of the
13.7 billion dollars external loans procured by Nigeria for various projects, some 836.2 million dollars were said to have been
lost to so-called ghost projects in parts of the country.
Ani, who described these as failed projects said that 18 of the supposed projects were non-existent.
He said the projects either never had sites, or where the sites were ever cleared, the projects were never executed, yet the
loans were in most cases drawn and unaccounted for.
However, the cheering news from the minister is that some of the state governments that sponsored the projects were in the
process of reviving them.
But while Nigerian officials believe that one way out of the present debt crisis could be the reduction of the Paris Club portion,
and the multilateral debt stock of about 63.93 million dollars, Ogwuma warns that Nigeria's debt servicing capacity has
declined over the years.
Analysts say the embargo placed on new loans is encouraging, but a more lasting solution seems to lie with what the World
Bank resident representative in Nigeria, Trevor Byer, called continuing macro-economic reforms.
These, he said, could help generate consistent fiscal surpluses of about 2 to 3 percent of Gross Domestic Product. Byer also
advocates reduction of public expenditures to (prop up) investment in people and basic infrastructure.
This is in addition to more accountability and transparency in the public sector as well as privatisation of major parastatals,
especially those engaged in production and distribution of gas, power, telecommunications, transportation, industry and
airports.
Analysts here commend the fact that for the first time in the 15 years of Nigeria's debt crisis, officials are braced to tackle the
problem, which Ani concedes, constituted a major threat to welfare and poverty alleviation efforts of the government.
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