Lagos — Nigeria is to seek more substantive debt relief from the Paris Club of private sector creditors, according to Philip Asiodu, Chief Economic Adviser to President Olusegun Obasanjo.
Speaking in Abuja, at the start of a two-day international conference on "Sustainable Debt Strategy," Asiodu said there was already a goodwill clause in the fourth rescheduling agreement which indicated the willingness of Paris Club creditors to consider alternative ways to restructure Nigeria's debt.
"To be considered for this debt reduction, it is required that Nigeria continues to make progress in implementing economic reforms within the framework of an IMF-sponsored, medium-term economic programme,'' Asiodu said.
He put Nigerias external debt 's stock at $28.5 billion, making Nigeria the largest debtor nation in Africa. About 78 percent of this amount is owed to Paris Club members.
According to Asiodu, Nigeria's debt stock as at the end of year 2000 amounted to 75 per cent of the countrys Gross Domestic Product (GDP) and represented about 186 percent of total export earnings.
Nigerias current debt profile seems contradictory, given the countrys position as a major oil-producing and exporting country; but servicing the debt eats up a large share of the countrys earnings. "Debt service due in year 2000 was over $3.1 billion or 14.5 percent of export earnings. These ratios are quite high and would easily place Nigeria in the league of the world's severely indebted countries,'' Asiodu noted.
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Nigeria is currently rated among the world's poorest nations, with about 60 percent of the population said to be living below the poverty line. Asiodu blamed this partly on the high debt service payments, which he said weakened the governments ability to finance crucial investments in poverty reduction and rehabilitation of decrepit infrastructure.
He said that the current leadership was fully aware of the links between debt, poverty, development and survival of democracy.
Asiodu acknowledged that debt rescheduling already negotiated by Nigeria had made a positive impact on the countrys cash flow by reducing the debt service due to creditors to $1 billion this year, from the $2.4 billion scheduled for the period (excluding arrears), which would, he said, have been "unmanageable."
In the two years since he was elected, President Obasanjo has repeatedly called for debt forgiveness or reduction, as a means of freeing up resources needed to meet basic human needs in African countries. He says Nigerians need to see a "dividend" from democracy.
Besides this, Asiodu argued Thursday, "a final argument for substantial debt reduction is moral.'' Previous governments, especially during the military dictatorship, contracted most of the debts that currently burden Nigeria.
Asiodu argued that the present government in Nigeria - which came into office on May 29, 1999 - should not be penalised for the mistakes of its predecessors, whose poor leadership, corruption and other historical circumstances, led to the debt.
He agreed, however, that debt relief must be accompanied by measures to promote rapid and sustainable economic growth, as well as combat poverty for it to be effective and sustainable. He said the government was determined vigorously to implement the reforms it had begun.
