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East West Debt, solving defaulted trade and bank debt
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East-West Debt oct. 2002 news, update : NIGERIA
Nigeria is in a very unusual position. It is Africa's most populous nation and one of the world's poorest countries. It is a country rich in oil but still one of the most indebted countries in the world with its $28 billion of foreign debt. Nevertheless, Nigeria is ineligible for debt reduction under the heavily indebted poor countries (HIPC) program. Nigeria is excluded from HIPC program although its per capita income levels and ratio of debt to gross national product are comparable with those of the 42 countries included in the HIPC initiative. Nigeria's debt is 93% of its GNP - a higher percentage than that of 15 countries on the HIPC list, including Burkina Faso, Senegal and Uganda. Nigerian government officials are disappointed that rich countries have made no concessions on debt despite the breakthrough elections in 1999 that ended 16 years of increasingly brutal military rule. The official logic for Nigeria's exclusion from the HIPC list is its $20 billion annual exports of oil. Such huge exports do not comply with the criteria set by the World Bank to decide countries eligible for aid. The World Bank feels that with the oil, Nigeria can service its debts on condition that the country puts its resources into proper use for development. Other reasons why the big economies say they are reluctant to give debt relief include the problematic relationship between the country and the International Monetary Fund. The ongoing problems and accusations led to breaking off formal links between Nigeria and the IMF earlier this year. The IMF stepped back from Nigeria because the government was unlikely to stick to the macro-economic targets due to the wasteful spending before general elections which are to be held next year. Nigeria's decision on breaking off cooperation with the IMF does not allow for further negotiations of debt relief which was dependent on the successful realization of the medium-term IMF program. A further obstacle may be Nigeria's culture of public corruption. The government applied measures such as the introduction of an anti- corruption commission and increased supervision of government spending but their impact on corruption remains very limited.
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East-West Debt has made every effort to ensure the accuracy of this publication. Neither the company nor any contributor can accept any responsibility for -including but not limited to- errors, omissions, opinions or advice given. This publication is not a substitute for professional advice and all information is for guidance only.
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