The Paris Club of Creditors, to which Nigeria owes about $22bn, has rescheduled the repayment over 18 years good news for a country with external debt totalling about $28bn.

The director-general of the Nigerian Debt Management Office, AS Arikawe, said in Abuja that the rescheduling was under a nonconcessionary arrangement.

He said Nigeria had not yet qualified for a debt reduction, and was only granted a rescheduling that extended the maturity of the debts.

“Nonconcessionary means that there is no reduction. What you are getting is just a lengthening of maturity. They just spread it …. Nothing is lost, all the money will still have to be paid,” Arikawe said.

Arikawe said that rescheduling would reduce Nigeria’s debt service commitment considerably.

He said that having an International Monetary Fund (IMF) adjustment programme was basic to debt management negotiations with the Paris Club.

Nigeria was hoping to have a medium term arrangement with the IMF some time next year, and “that automatically qualifies us to have a debt reduction, either based on Toronto, London or Naples terms”.

Next year, Nigeria will spend about $1,7bn on servicing its foreign debts. The amount is $700m more than what it set aside for the same purpose this year.

Since May 29 1999 when he assumed office, President Olusegun Obasanjo has mounted a campaign to have debt reduced or forgiven, a move largely rejected by western countries on the grounds that oilrich Nigeria is buoyant enough to repay its debt. Nigeria hinged its plea for debt forgiveness on the grounds that the debt burden could truncate its fledgling democracy, and the huge amount it spends yearly on debt servicing is too high to enable it to undertake vital social and infrastructural spending needed to alleviate poverty. Obasanjo has criticised the compound interest formula used, saying that Nigeria is still far away from repaying the principal sums it borrowed.

Last week, the federal government, disturbed by “excessive scrambling” for foreign loans by the country’s 36 state governments, as well as by public agencies, put a ceiling of $500m as the maximum loan any applicant can take.

Information Minister Jerry Gana said that a substantial percentage of projects for which loans were being sought were unviable and would only end up raising the nation’s debt profile.

Business Day, December 10, 2001