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SME JOURNAL WITH VONA OYIBO -
Nigeria Settles Debt
Despite great oil wealth, Nigeria is one of the world's poorest
nations Nigeria has paid off its multi- billion dollar Paris Club debt,
becoming the first African nation to settle with its official lenders.
The move may clear the way for greater government spending
on infrastructure, healthcare and education, and is hoped will
prompt greater foreign investment. Nigeria has undertaken a programme
of economic reforms and the oil exporter has been helped by record crude prices.
The Paris Club is a group of 19 lenders including the UK,
Russia, and Germany. "The central bank has converted the
currencies in advance so it's procedural now," Mansur
Muhtar, director general of Nigeria's Debt Management Office, told Reuters.
"All the necessary instructions have been sent."
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After the $4.6bn payment,
Nigeria still will owe about $5bn to other lenders, including the
World Bank and the private sector. Nigeria is one of the world's
biggest oil exporters, but it is also one of the world's poorest
countries, with the majority of the population living on less
than $1 per day. The government is now benefiting
from high oil prices, despite production problems and unrest
in the Niger Delta region.
During the years of military dictatorship, little of Nigeria's oil
wealth reached the average person. The current government
is seeking the recovery of billions of dollars put away in
Swiss bank accounts by General Abacha. |
The country's debts date back
to the early 1980s, and had ballooned to more than $35bn due
to penalties and late fees during the 1990s. Last year the country agreed to
a repayment plan that was a mix of cash and debt relief,
backed by the country's burgeoning oil revenues.
Nigeria agreed to pay the Paris Club $12.4bn (£8.2bn) in
exchange for the remainder of its $30bn official debts being
written off. Nigeria's plan to pay off its debt and restructure its economy
was approved by the International Monetary Fund (IMF) earlier this
week . The debt repayment is a key part of the economic reform
plan of President Olusegun Obasanjo, who is also planning
a string of privatisations, tax reform, and greater transparency
in order to boost the economy and attract foreign investors.
Nigeria has already been removed from an international
credit blacklist, and now has credit ratings similar to other
emerging market countries such as Turkey and Ukraine. That
means the government is now able to borrow money on international
capital markets on favourable terms. Nigeria has followed a different
path from other African countries who have been burdened
with debt .It was not included in the list of highly indebted poor countries
(HIPC) that were eligible for 100% debt relief from official
lenders, the IMF, and the World Bank, due to its oil wealth.
However, those countries have been subject to stringent conditions
and long delays before they qualified for debt relief.
Nigeria has been able to negotiate its own debt deal at its own
pace because it has the funds to partially pay off its creditors,
who were happy to accept a smaller overall payment in
return for cash upfront.
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