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Nigeria: Ciroma Explains Default in Foreign Debt Payment
This Day (Lagos) August 29, 2002
Finance minister, Adamu Ciroma yesterday said the repayment of Nigeria's external debt is being deferred because the National Assembly did not approve enough in the appropriation bill for debt servicing. In an interview on British Broadcasting Corporation (BBC), Ciroma said the creditors particularly those in the Paris Club will have to wait for next year's budget when the law makers would approve the next amount to be paid.
According to Ciroma, Nigeria has an agreement with the Paris Club to spend $3.2 billion on debt repayment this fiscal year but only got $1.5 billion allocated to it by the National Assembley. "Since the National Assembly approved $1.5 billion for debt repayment for this year, the government has to obey the appropriation laws. Moreso, the payment can only be made when there are provisions in the budget and we have expended this year's budget," he told the BBC's Africa service. "So it means next year's budget."
He stated that the lawmakers, in their opinion decided to reduce the amount allocated for debt repayment in order not to deprive the country from having enough resources to meet its other obligations to the people in the areas of provision of education, and other social infrastructures. He, however, assured members of the Paris Club of the willingness of the country to open a discussion on ways of repaying the debt. Earlier, the Information Minister, Professor Jerry Gana had at the end of the Federal Executive Council meeting proffered similar reasons for the inability to sustain the debt repayment.
In a swift reaction,Britain, Nigeria's single largest creditor owed $6 billion condemned the suspension. The British High Commission in a statement in Lagos, insisted that Nigeria has an agreement with the Paris Club (of creditor nations) and has itself committed to a schedule of debt repayments. "There has been no prior agreement to suspend payments."
Also reacting a presidential aspirant, Chief John Nwodo blamed the suspension on lack of sound economic management by the present administration. Speaking in an interview on BBC, Nwodo accused the Obasanjo-led government of wasting resources on projects that have no economic building capacities. "This government is planless and it has no focus on what it takes to manage a country. We have crippled our capacities to generate wealth through economic growth", he added.
Only on Tuesday, Central Bank Governor Joseph Sanusi said that in July, because of a squeeze on foreign reserves, "payments of external debt service which was due and unpaid were deferred." Nigeria has around 28.5 billion dollars in external debt, according to official figures. In July the country failed to make service payments on debts of around $22 billion to the countries represented in the Paris Club of creditor nations. Meanwhile,payments to commercial lenders and to multilaterals such as the World Bank and the African Development Bank continued, they said.
Magnus Kpakol, chief economic adviser to president said that Nigeria needed time to put its house in order and hoped to win debt relief from foreign creditors. "There is still a commitment on the part of the government to service our debts, as there had been for 14 years," he said, adding: "Debt relief is imperative."
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