“Nigeria’s debt write-off at the Paris Club demonstrates the partial success of the Nigerian parliament’s threat to cancel its own debt through repudiation, which helped to force the hand of these creditors.”

Nineteen rich country creditors grouped in the Paris Club officially announced today an $18 billion write-off of Nigeria’s debt, whose total debt to these creditors is around $30 billion. While Jubilee USA Network and other civil society groups welcome the Paris Club’s move to write off a substantial portion of Nigeria’s debt, groups expressed specific reservations on the deal, including the terms of the debt buyback and the involvement of the International Monetary Fund (IMF), which is not a Nigerian creditor. Some observers pointed to the role of an early 2005 process in the Nigerian parliament calling on the government to repudiate the impoverished country’s debt as a key factor forcing the Paris Club to act.

Jubilee USA is concerned however about specific terms of the agreement reached today that would require the Nigerian government to spend $12 billion on debt service payments over the next six months as part of the buyback arrangement, while adhering to a newly-created IMF economic program. The new IMF program, the Policy Support Instrument, extends IMF power to those countries it is not lending to. Past impoverished country experiences with similar IMF programs have shown that such programs lead countries to privatize essential services and cut social sector spending. Despite the concerns, Jubilee USA Network shares the Nigerian government’s hopes that debt cancellation will allow the country to channel resources away from debt servicing and towards health care, education, and other critical social needs.

Debayani Kar, Communications and Advocacy Coordinator of Jubilee USA Network said: “Nigeria’s debt write-off at the Paris Club demonstrates the partial success of the Nigerian parliament’s threat to cancel its own debt through repudiation, which helped to force the hand of these creditors. While we are encouraged by the Paris Club’s agreement to cancel some of Nigeria’s debt, we don’t think it makes sense to make an impoverished country like Nigeria pay $12 billion when that money should be spent on AIDS, health, and education.”

David Ugolor, President of African Network for Environment and Economic Justice (ANEEJ) in Benin City, Nigeria said: “The Paris Club cannot expect Nigeria, freed from over 30 years of military rule, to muster $12 billion to pay off interest and penalties incurred by the military. Since the debt, by President Obasanjo’s own admission, is of dubious origin, the issues of the responsibilities of the creditors must be put on the table at the Paris Club. As desirable as an exit from debt peonage is, it is scandalous for a poor debt distressed country, which cannot afford to pay $2 billion in annual debt service payments, to part with $6 billion up front or $12 billion in three months or even one year.”

Sony Kapoor, Senior Advisor at Christian Aid (UK) said: “The deal will provide much overdue relief and free Nigeria from much of its debilitating debt. However it took the threat of repudiation to get this cancellation – as if the obvious need of the people and the odious nature of much of the debt were not enough. What is worse is that creditor countries are extracting a pound of flesh in the form of $12 billion worth of payments from Nigeria and have put in place a new IMF program despite Nigeria not owing anything to the Fund. On a more positive note, the deal has set the scene for a more assertive negotiating stance by other indebted developing countries.”

Jubilee USA Network is the US arm of the international movement working for debt cancellation for impoverished nations. Jubilee USA is a network of over 70 religious denominations, labor groups, environmental organizations, and community and advocacy groups working for freedom from debt for countries in Africa, Asia, and Latin America.

Jubilee USA Network (Washington, DC), Debayani Kar, Jubilee USA Network, October 20, 2005