Abuja — For over three decades, Nigeria has been weighed down by the huge external debt burden which has continued to impact negatively on the nation"s budgetary allocations to key sectors of the economy and social sectors which could raise the level of living standards of the people through poverty alleviation. The most disturbing of the debt crisis is the fact that the more the nation pays, the more the stock increases.

For instance, the President Olusegun Obasanjo administration has been paying about $1.7 billion annually in the last three years. Yet, the debt stock which was about $32 billion in 2002, has by now hit about $36 billion. The current annual debt service budget of the federal government is said to be far less than the amount due each year, which has been put at about $ 3 billion, leaving more to be rolled over into the following year. Besides, that amount said to be too small is more than the budgets for critical sectors such as health, water and education, put together, each year-a clear indication that the debt could not be sustained.

It was in the light of this realization that President Obasanjo and his team launched a vigorous campaign for external debt relief- a campaign which has taken him and his officials to virtually all countries that matter. Yet, when the G8 Finance Ministers, last week, announced a $55 billion debt cancellation for debtor nations, Nigeria was excluded. Consequent upon this, many Nigerians concluded that the resources expended by the President, the Minister of Finance, Dr. Ngozi Okonjo-Iweala, as well as the Director-General (D-G) of the Debt Management Office, Dr. Mansur Muhtar, and his officials, have been wasted. But the government officials are insisting that Nigeria has not lost anything by not being part of the HIPC initiative. The nation, they argue, is still on course for a comprehensive debt relief.

Below are the views of the Minister, World Bank President Paul Wolfowitz, DMO D-G, as well as, the Country Representative of the African Development Bank (ADB), Mr. Zongo Sakala.

NIGERIA remains extremely hopeful--Okonjo-Iweala...Says we want to exit Paris Club

After many foreign trips by Mr. President, yourself and several other government officials, we are yet to record the much expected debt relief from any creditor. Some Nigerians believe it has been a waste of resources to have pursued debt relief in the first instance.

Absolutely not. The effort has not been wasted. As I said earlier, Nigeria is not a HIPC country. We are highly indebted but we do not belong to the categorization of HIPC countries that owe their debts to multilateral institutions such as the ADB, IMF and the World Bank. And because they have difficulties in paying those, they are the ones being treated now, for 100 per cent debt relief. As you know, Nigeria owes very little to the multilaterals. Only Eight (8) per cent of our debts of $36 billion is owed to them. So that is not our problem.

Even if we were part of that group (HIPC), it wouldn't do us much good. Even if we get 100% off that, we would have $30 billion owed to Paris Club which we will not be forgiven. That is why we are not in that group. We don't have the same problem as those countries. Because of that, we decided that under another approach, the G -7 and the Paris Club have allowed which is called the Avien Approach because it was agreed in Avien France, two years ago by the G -7 Presidents that a country could be considered for debt relief on a case-by-case basis. That kind of debt relief will look at the peculiarities of that country.

So we approached them under Avien terms and we have been negotiating with them. As you know, Mr. President has been very active at the level of the Presidents, trying to get them to support us and I equally have been working with the Finance Ministers of the G 7 and the other countries on the numerous technical issues that have to be sorted out when you are going to get debt relief.

What issues?

It is not just the question of going to talk to the people and say we want debt relief. There are very many technical issues that have to be answered. We have been working on the analysis of those issues in the last one year with the Debt Management Office (DMO), trying to set out those parameters and then equally, we have been talking to the Finance Ministers and presenting analysis on debt sustainability, analysis on Nigeria's ability to attain the MDG s and all those too numerous to name.

That we have to do to make our case technically, because no matter what you do, if you don't make your case technically, it won't work. Also, the worth that has been done by the Economic Reform Team, here, has been extremely helpful in helping to lay the basis for us to even approach them. So all these factors have come into play in terms of making a sound case. Now, the G 7 Finance Ministers met, there is a communique with actual words which say that Nigeria is very important to the continent of Africa, therefore it deserved to be looked at and Nigeria deserves fair and sustainable treatment of the debts.

That is why it is extremely hopeful because for the first time, they have put in writing that this is what they think. Right now, the issue has gone to the bigger Paris Club for debate, therefore, we have to wait for them to discuss before we get the details of what type of relief we are going to get. What we are expecting from this relief is an exit strategy. We want to work with them so that we exit the Paris Club completely. Take care of all our debts and exit. That is what we are hoping to do.

How soon do we expect a response?

And we are expecting, hopefully, in the next two or so weeks, we will get an answer.

Some of the debts were questionable, Says DMO Boss

Could you tell us what exactly is our chance of receiving any debt relief in real terms when Nigerians thought that at the end of announcement of the Initiative team and Nigeria was not there, that Nigerian's effort for debt relief has been a waste of time

I think it is not a waste of time. I want us to believe that we have recorded a major breakthrough as a result of G-8 meeting. The debt cancellation that was announced for the 18 countries listed plus the remaining that will qualify subsequently is target at special categories of countries in which Nigeria does not belong, these are highly indebted countries whose debt are primarily official debt owned to IMF, World Bank and other multi lateral institutions and this countries have also gone through process of debt relief involving their bilateral creditors.

In the case of Nigeria, this arrangement will not have conferred much benefit because if Nigeria was on the list, the maximum amount of debt we are talking about is three billion dollars owned to this institutions. So ours is a special treatment that we are going to receive and many Nigerians do not recognize the fact the G-8 communique contained a whole paragraph devoted to Nigeria, commending the efforts and noting the good progress that has been made in implementing reform and recognizing Nigeria"s strategic role in Africa, as well as, also giving a commitment to providing Nigeria with debt relief that will allow it to have a sustainable exit from its present indebtedness, so that in itself is very clear and unambiguous statement.

The key challenges now and these are details, is to work out the details of what kind of relief Nigeria get and like I said, they have indicated a sustainable exit and another point that was made in the communique was that this relief will be delivered before the end of 2005.

Is it true that the bulk of Nigeria's external debt is commercial debt?

Yes, it is a combination of official bilateral debt which stemmed largely from different sorts. First of all, borrowing for project loans. These are really insured loans that were granted by private sector in developed countries including commercial banks. It also included official loans granted on bilateral basis as well as trade credit that was insured ,so all of these were consolidated because Nigeria could not pay, so they were consolidated. Some were insured debts or direct official debts they became official bi-lateral debts, and these are Paris club debts and that is the bulk of the debt, about 80 percent.

Now as we talk about Paris club debt, and talking about negotiating, whom exactly are you negotiating with. Are you negotiating with sovereign governments or negotiating with private sector organizations?

No, we are negotiating with sovereign govt. and the framework for these negotiations is both at the bilateral levels where we have to soften the grounds for the sketching, we have to go in, having a formal discussions, but the formal negotiations takes place within the frame work of Paris club and currently between yesterday and today (June 16 and 17), we understand Paris club creditors are meeting to consider how the commitment or pronouncement at G-8 could be actualized.

How did we get into these debt problem?

I think most of these debts stem from loans taken many years back from very early 80s period when oil prices started going down and we could not adjust our expenditure pattern. So they were loans that were taken to continue with projects. They were also trade arrears that kept mounting.

Export credit agencies

We had commitments that could not be serviced and since these were guaranteed by export credit agencies since we became even non- guaranteed bank, we issued promises that we know that will be guaranteed once they were converted to official debts because what happened then was that the export credit agencies in these countries paid up the creditors of their exporters as the case may be and assumed the debt and that is the standard practice and then they will present the bill to you.

So they have this arrangement where insured export credit agencies that insured this trade so that if you don't get paid, you can go and claim from them and go check up the debt because it is easier for them to collect it and by so doing, promoting exports and thier business.

Now that we are at this stage, what are the specific things that you have done at the DMO as the representative of federal government that gives you the confident that you have a case before the creditors?

Over the years, the President has articulated in very clear terms for debt relief for Nigeria and this is related to political level if you look at the geo-political and strategic significant of the country in the region.

The important peace keeping role that he is playing and the conflict resolution, all these efforts and the fact that Nigeria is the giant of Africa, one in five Africans is a Nigerian. If the international community wants to make a difference in the lives of Africans and drive the economy of the region, Nigeria is strategically important and certainly there are arguments related to the country's per capital income levels. Looking at the socio-economy profile of the country, it is clear that Nigeria is a poor country and so also deserves debt relief especially if the developed countries genuinely mean what they say about helping other countries develop and helping other countries attain the MGDs targets.

Then certainly, there are other issues related to the nature of these debts. The fact is that a lot of it is interest and penalties and also a consideration should be given based on the fact that some of this debts are illegitimate and should be a shared responsibility since some of these creditors advanced these credit facilities without due regard to the economic viability of the projects or the fact that some of these projects have not been executed.

I think we have been making this argument over the years but the real argument that has made a lot of difference, because before now the creditors will always turn around and say Nigeria is not making enough efforts to reform its economy, Nigeria has problem with governance and so on but really they have found out because of the remarkable progress that has been made in implementing reforms and that is what I told you, even the G-8 communiquéé began by acknowledging the success Nigeria has made implementing reforms- economic and governance reform.

That the reforms has began, we have made concerted efforts over the last two years to implement our own home grown programme without any fund and that they are taking us seriously in terms of what the government is doing. For us basically, it has been a long-drawn out process and we have certainly achieved the recent G-8 communiquéé and commitment expressed therein to provide Nigeria with some relief. It should be a welcome development to all Nigerians and we do have to appreciate however that the journey has not been easy, that it has been extremely difficult to even get this concession we are talking about.

As you know, this creditors have rules and procedures and precedents. About a year or two years ago, it was looking almost impossible for us to make progress on our debt. I think it is a major breakthrough and we are working hard to make sure that at the end of the day, it will be beneficial to all of us and beyond that, going forward, I think that Mr. President is concerned to ensure that even as he leaves this legacy that we put in place appropriate legislation to ensure that economy is managed most soundly. Like the Fiscal Responsibility Bill; the Extractive Industry, Transparency Initiative Bill are all designed to ensure that there are very stringent conditions on borrowing so that we don't fall back into this mess.

Having said that, I think we are now waiting for the final details of agreement. We believe that we have a strong case. We have assured our creditors who have been concerned about the utilization of funds freed in the event of debt relief. The President has put in place the framework for the establishment of a crucial Poverty Eradication Fund which would be a basis for renewed and aggressive investments in education, health, water and infrastructure that would directly impact on the people.

Why Nigeria didn't get HIPC debt relief, by World Bank president

During his visit to the country last weekend, the World Bank President, Mr. Paul Wolfowitz, said that Nigeria did not benefit from the just announced debt relief granted to debtor nations by the G8 countries under the Highly Indebted Poor Countries (HIPC), saying that although Nigeria could be considered poor, it had great resources and potentials.

He also said at a press conference in Abuja, Thursday, that Nigeria's debt problem was compounded by the fact that the bulk of its debts were private or commercial debts rather than sovereign, as was the case with most other debtor nations of the world. The president, however, expressed hope that the forthcoming EU Summit in England, would come out with a positive framework through which Nigeria could receive some form of debt relief from its creditors.

He admitted that given Nigeria strategic position, role and size, it could not be ignored in the on-going global debt relief campaign and that both multilateral finance organisations as well as sovereign creditor nation's were already engaging one another with a view to granting Nigeria the level of relief that could impact positively on the economy and its people.

Nigeria still hopeful, can't be ignored, says ADB Boss

In a similar vein, the country's representative at the African Development Bank (ADB), Mr. Zondo Sakala, also said in Abuja, last week that Nigeria was still hopeful of debt relief even without benefiting from the recently announced $55 billion debt cancellation for the 18 of the world's poorest debtor nations under the Highly Indebted Poor Countries (HIPC) by the G8 nations.

According to him, Nigeria's creditor nations and multilateral organisations were working towards debt relief for other nations, including Nigeria, that did not qualify for debt relief under the HIPC initiative, as according to him, the on-going global campaign for debt relief was in phases. His words, "on Nigeria debt, I think the statement from the Minister of Finance, Dr. Ngozi Okonjo-Iweala, is very clear. It is not a matter of exclusion. You know the first phase of the debt cancellation is for the Heavily Indebted Poor Countries and Nigeria is not one of the HIPC.

"We are going through phases, starting with the poorest but that also must meet certain conditions. There is every reason to hope that Nigeria will also be given debt relief in the near future." On the sustainability or otherwise of Nigeria's huge debt overhang, he said, "of course, the issue is not mathematical but the major concern is at the moment Nigeria is spending a lot of its resources to service debt, which of course makes it more difficult for them to meet the millennium development goals.

"Because the money used to service debts is money that is not available for education, health etc. I think this is the context in which the debate should be taking place." $5 billion of the entire $55 billion debt being cancelled belongs to ADB. It would be paid back by the G-8 Countries on behalf of the debtors in a global partnership to free resources for debtor nations of the world in order to invest more in human capital development and the provision of infrastructure towards meeting the Millennium Development Goals (MDGs) , come 2015.

It's now or never -- Amb. Aluko-Olokun

Economist cum Diplomat, Amb. Isaac Aluko-Olokun, said the forthcoming G-8 Summit slated for Gleneagles, Scotland in July, was crucial for debt relief for Africa where Nigeria could not be ignored if the developed world really meant to assist the region to gain a hold on economic growth and better living standards. According to him, Nigeria plays a leading role in all of Africa's priorities including, peace and security, particularly, the proposed Stand-by Brigade by year 2010, for peace keeping purposes, the APRM, Infrastructure Development Programme, increased aid inflow, as well as better international trade structure.

He added that human development, focusing on health and education would also be on the front burner of the meeting with the group of eight developed nations, some of which have been long-standing development partners to the African continent. According to the diplomat, the G-8 members themselves have made a series of commitments on their contributions towards accelerated development and sustainable growth in Africa from its present socio-economic level to a position where it could meet the Millennium Development Goals (MDGs), come 2015, but asked that the pledges be backed with actions.

He said that some of the specific recommendations of the group had been aptly captured in the Blair Commission for Africa report which has recommended increase in Official Development Aid (ODA) by $25 billion and a doubling of the figure to $50 billion by year 2010.

"On our side, there are priorities agreed with the G-8 leaders and on their parts there are commitments. We have promises and the challenge now is to translate those promises into actions that concretely put on the table for Africa, resources that the G-8 leaders want to help Africa, with. We have done a lot of talking. The whole of the NEPAD process abound on rhetorics. We are short on actions. Just do it.

Let's see what you want to do", he said. Amb. Aloku-Olokun insisted that the triad of debt relief, aid and trade would remain crucial at the summit and that it was time for the G-8 leaders to actually free the continent from the debt burden, not only for the very poor nations through the Highly Indebted Poor Countries (HIPC) initiative but also debt relief for other middle-income debtors nations, like Nigeria.