Debt and Development Issues
Government needs $4.9billion to service foreign debt
Jul 17, 2003, 00:46
| | The Debt Management Office (DMO) has disclosed that this year alone Nigeria is indebted to the London Club, the Paris Club and other multinational institutions to the tune of $4.9billion. Of this amount, the 36 states in the country need about $1.2billion to service their foreign debts to the London Club, while the Federal Government needs $3.8billion to service its foreign debt.
Abia and Niger States top the list with a debt service requirement of $89million and $85.5million respectively, followed by Lagos State with $79.2million, Imo State with $78million and Plateau State with $70.3million.
Zamfara State has the least debt service requirement of three million dollars, followed by Katsina State with $3.7million, Kebbi State with four million and Cross River State with $11million.
Unless recent moves by the Government to buy back part of the country's foreign debt are successful, the country will be saddled with its $4.9billion debt.
Late last year, the country offered to buy back two billion dollars worth of its commercial Brady debt in an effort to restructure its debt burden and improve relations with the International Monetary Fund (IMF).
Nigeria is already in default of $22billion worth of Paris Club debts owed to sovereign lenders, and is struggling to service its $3.5billion London Club obligations, which include two billion dollars in Brady bonds. Brady bonds comprise debts restructured under plans devised by Nicholas Brady, the former US Treasury Secretary. Most of these are held by hedge funds (funds to guard against uncertainties) and dedicated emerging market investors.
The Government has said that it hopes renegotiating repayment of its commercial debts will give it time to rebuild relations with the IMF and hold talks with the Paris Club.
According to the DMO, 80 percent of Government’s total debt liabilities stemmed from borrowings made between 1980 and 1984, covering the period of the Second Republic of President Shehu Shagari.
Nigeria is excluded from debt relief available under the “highly indebted poor countries scheme” set up by the IMF and the World Bank, because of its oil wealth and because it has no formal agreement with the IMF on an economic management programme.
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Nigeria redeems N482million external debt
a href="http://www.nigeriafirst.org/article_431.shtml">The Debt Management Office (DMO
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