Nigeria is yet to pay the $6.4 billion due to the Paris Club on account of the debt relief granted the country, Finance Minister, Dr. Ngozi Okonjo-Iweala said yesterday. Fielding questions from Senators ahead of today’s Senate deliberation on the supplementary budget to cover the debt payment, Dr. Okonjo-Iweala, however, admitted that the Central Bank of Nigeria (CBN) had swapped $6.4 billion into an escrow account in preparation for the payment. The swap, the Finance Minister stressed, was part of the CBN’s international foreign exchange operations which the apex bank carries out from time to time.

She assured the legislators that payment would not be effected before the approval of the National Assembly. At her appearance yesterday, Dr. Okonjo-Iweala also said the debt relief would give Nigeria an enabling economic environment to be assessed by international rating agencies.

Dr. Okonjo-Iweala’s appearance before the Senate came against the background of misgivings by Senators that the administration may have violated the Constitution by effecting the debt payment without the requisite backing of the National Assembly.

The Finance minister was welcomed to the Senate chamber by the President of the Senate, Chief Ken Nnamani, who told her about the apprehensions of lawmakers that some provision of the Constitution might have been violated through the possible payment of the debt without legislative approval.

She said: “I want to thank you for the opportunity. As you know on the 17th and 18th of October we had an historic opportunity to exit from the Paris Club. We negotiated with some members of the National Assembly (Senators Udoma Udo Udoma and Effiong Bob) who also participated.”

According to her, by the agreement, Nigeria was expected to demonstrate her commitment by offsetting current arrears of $6.4 billion due to the creditors as a condition for getting about $18 billion written off from her debt stock of $30 billion to the credit club.

The balance of about $6 billion, according to her, could be bought back at a discount, an agreement she thumbed up as only rivalled by one other debt write-off in the annals of the Paris Club. Besides, she said not even Russia, which had some of its loans written off, was allowed to buy back its debt from the Paris Club at a discount.

“We have not done the payment, but made the preparations. We have not been able to make the payments, we are awaiting the approval of the National Assembly. We have been discussing with the Paris Club and have told them that between now and March we will complete the payment. We have put the money into an escrow account. It doesn’t belong to the creditors, it is for us. We simply need a vehicle to pay back and that is to pay back in the currency they were borrowed. And we hope that the distinguished Senators will support us,” she said.

Several Senators raised observations on the submission by the Finance Minister. Senator Uche Chuwkumerije (PDP, Abia North) nearly put the minister in a corner, wanting to know the source of the funds used by the CBN in swapping the $6.4 billion into the escrow account. She said the swap operation by the CBN was a normal operational procedure of the apex bank [. . .] done to prepare the country for the payment whenever legislative approval was secured.

Responding to a question by Senator Isaiah Balat (PDP, Kaduna South), the Finance minister said the debt relief would give the country an enabling economic environment that would usher in international credit rating agencies. She said Standard and Poor, the international credit agency, would be coming into the country next month, a move she said, that would pave the way for more international investors to come into the national economy.

Following other questions from Senators Farouk Bello, Kassim Isa Oyofo and Timothy Adudu, and appropriate responses from the minister, the Deputy President of the Senate, Senator Ibrahim Mantu moved for the minister to be applauded.

Emmanuel Aziken, Vanguard (Lagos), November 17, 2005