[stop-imf] Nigeria suspends debt payments

[Robert Weissman]

Nigeria suspends debt payments (BBC World Service, August 28)
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Nigeria has said it can no longer afford to service its $33bn foreign debts
because of plunging oil revenues and the failure of some of its
privatisation plans.

Consequently, the country has suspended payments on its debts, said Central
Bank governor Joseph Sanusi.

Last month Nigeria - one of the world's largest oil-producing nations - held
foreign exchange reserves of only slightly more than $8bn, down about a
fifth since December.

Mr Sanusi said he had decided to halt all debt repayments rather than to eat
further into the reserves.

Most of Nigeria's debt is owed to foreign governments, members of the Paris
Club of official creditors.

Earlier this year, Nigeria parted company with the International Monetary
Fund about how best to achieve a turn-around in its economic fortunes.

Limited funds 

Nigeria's finance minister Adamu Ciroma told the BBC that the country was
unable to pay because parliament had only approved a limited amount of
funding for the current financial year.

The country's outstanding debt stands at around $30bn, but this is the first
time it has completely halted its payments.

Nigeria has been asking official creditors for substantial debt relief, but
apart from a modest amount of debt rescheduling, has not had much success,
says the BBC's Dan Isaacs in the commercial capital Lagos.

This is because it has failed to demonstrate the required track record of
sound economic management, our correspondent says.

Put simply, Nigeria is spending faster than it is earning and therefore
falling deeper into deficit.

But with national elections only a few months away, there's little sign that
the government is tightening its purse strings.

The Central Bank governor Mr Sanusi said: "The external sector of the
economy was under pressure during the period under review".

He added: "The deficit was financed through the draw down of external
reserves." Officials said Nigeria's inability to recover money which a
previous regime had stolen was making matters worse.