IMF/World Bank opposes debt relief for Nigeria

[Robert Weissman <rob@essential.org>]

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World Bank Development News, 9/7/99

NIGERIA SHOULD SEEK CREDIT-WORTHINESS, NOT RELIEF: OFFICIALS.

Nigeria's bid for debt relief has cut little ice with the IMF and the
World Bank ahead of their annual meetings this month, AFP reports
diplomats and officials say. The country has foreign debts of around $30
billion, mostly run up under un-elected regimes. The new authorities under
President Olusegun Obasanjo have led a noisy campaign for relief since
taking power in May, but officials say the country is not in the running
for debt cancellation.

Though it is Africa's largest oil producer, Nigeria achieved a GDP of only
$39 billion in 1998 and a per capita income of just $260 dollars a year,
the story notes World Bank staff say. In the just-approved supplementary
budget for the second half of 1999, a crippling $875 million was set aside
for debt servicing. However, no debt write-off is being seriously
considered ahead of the meeting of Bretton Woods institutions in
Washington on September 21-30. "Nigeria's external financing position is
weak," World Bank country director for Nigeria Trevor Byer is quoted as
saying. "There is a good case for debt re-scheduling but debt cancellation
would have a harmful medium and long-term impact. People forget that debt
cancellation affects credit worthiness. It is a question of what future
Nigeria wants: the seven to 10 percent growth for the next 20 years it
needs, via access to foreign capital, or the short-term gain of debt
cancellation and no access. It could be very important for Nigeria to be
seen, in the African context, as one of the few credit-worthy countries."

The news comes as President Olusegun Obasanjo said yesterday that the IMF
was likely to recommend Nigeria for "debt reduction", AFP reports. "The
IMF, because of our performance politically, economically and socially, is
likely to recommend us for consideration by those we owe for debt
reduction," he said on CNN television. In an interview marking the first
100 days of his administration, Obasanjo said the new Nigerian government
was working very closely with the Fund, which he believed would prepare a
loan package to assist the new Nigerian government following the May 29
return to civilian rule. "We are going to get whatever IMF believes we
should get to tide us over," he said.