Nigeria’s debt burden remains stubbornly high.

Pressure on the Nigerian government to suspend foreign debt payments has eased after the country’s Senate voted to honour debt obligations this year.

The House of Representatives earlier called for a halt to payments on Nigeria’s $35bn (£18bn) debt.

Nigeria has a cripplingly high debt despite making payments of more than $40bn since the late 1960s.

President Obasanjo has asked for time to discuss the debt with creditors such as the Paris Club of wealthy nations.

Huge burden

Nigeria has the largest external debt of any African country, due largely to interest accrued on payments to creditors.

In protest at the stubbornly high debt, the House of Representatives voted on Tuesday to scrap foreign debt obligations, totalling $1.3bn, from the 2005 budget.

It appears to us that there is no light at the end of the tunnel

Alhaji Hamisu Shira, Nigerian MP

However, the Nigerian Senate approved the 2005 budget on Wednesday with the debt obligations intact, seemingly averting an immediate crisis on the issue.

However, there is still intense pressure on the government to tackle the debt burden.

According to the Debt Management Office, Nigeria still owes $25bn alone to the Paris Club, its single largest creditor, despite paying out $42bn over the past 38 years.

“It appears to us that there is no light at the end of the tunnel,” Alhaji Hamisu Shira, a member of Nigeria’s House of Representatives, told the BBC’s Network Africa radio programme.

“We strongly believe that the international community is not being fair to Nigeria but we are more than qualified for either debt relief or total debt cancellation,” he added.

Threat of isolation

A unilateral suspension of debt payments could lead to Nigeria being shunned by the world’s leading financial institutions.

President Obasanjo said he had sympathy with the MPs’ feelings but begged for more time to tackle the issue.

“I am aware of your concern and I share in your frustration,” he told MPs on Wednesday.

“I appeal that you should give me a bit of time to see what we can do on discussions, bilateral or even multilateral so that we can sail through without unilateralism.”

Corruption claim

President Obasanjo has campaigned for debt relief for Nigeria, Africa’s most populous country, since 1999.

However, foreign governments and bodies such as the International Monetary Fund say he has not done enough to tackle corruption.

Revenues from oil exports have also boosted Nigeria’s foreign exchange reserves to an all-time high, leading many creditors to argue that Nigeria has to scope to continue its payments.

“We view this as a piece of populist grandstanding that has little chance of implementation,” Peter Worthington, of Credit Suisse First Boston, said of the moratorium call.

BBC News, March 9, 2005