US legislators oppose debt deal

Daily Trust (Abuja)
January 9, 2006

Some members of the United States Congress have welcomed the debt deal between Nigeria and the Paris Club of creditors whereby Nigeria pays $12.4 billion in return for an $18 billion debt cancellation, but strongly urged the US not to collect its share of the debt from Nigeria.

The US Congressmen have also expressed concern that the deal would strengthen IMF’s control of Nigeria’s future economic policies.

Eighteen members of the Congress on December 22, 2005, wrote a letter to the United States Treasury Secretary, Mr John Snow and the US Export-Import Bank President, James Lambright, demanding that the US returns its share of the $12.4 billion to be paid by Nigeria in arrears and debt stock.

As part of this deal, the US is expected to receive her own payment of $396 million by March. The US share of the debt is held by the Ex-Im Bank and the US Agency for International Development.

The letter which was initiated by Rep. Donald Payne (Democrat-New Jersey) and Rep. Maxine Waters (Democrat California) acknowledged the cancellation of Nigeria’s debt by the Paris Club in October 2005 because “Nigeria has long been burdened by an unjust and unpayable debt burden” and appreciates the role of the US government in securing the debt write-off, but noted that the US should not accept the payment of debt from Nigeria because she is one of the world’s most impoverished countries.

“One in five children does not live to the age of five. In Nigeria, 2,500 children are dying needlessly everyday from preventable diseases and more than 300,000 Nigerians die each year from HIV/AIDS,” the letter said. It quoted Columbia University Professor, Jeffrey Sachs, Special Adviser to the UN Secretary General, Koffi Annan who noted on November 11th that “Twelve billion dollars in Nigeria could go a long way towards saving children, provide immunization, healthcare, education I say to the donors, “return that money. By doing so, this deal could be turned from a good thing into a fantastic thing”.

According to the US congressmen, given the considerations on Nigeria’s debt position and the US’s stated commitment to poverty reduction in Africa and Nigeria’s need to invest all the funds possible to address poverty, the US Treasury and Ex-Im consider returning the US share of the $6.3 billion to be paid by Nigeria in arrears last year and the next tranche of $6.1 billion in March. According to Nigeria’s Debt Management Office, this would cost the US$396 million, a relatively small amount in terms of US budget, but large in terms of the potential impact on Nigeria.

To ensure that the funds go for poverty reduction, the Congressmen proposed that the funds be channelled through the World Bank sponsored Virtual Poverty Fund which includes oversight by government, civil society and the international community.

The congressmen also expressed reservations over the deal on the premise that IMF would further use it to tighten its hold on Nigeria’s economy through the implementation of the new IMF policy support instrument,whose real ownership they said, still remains to be verified.

“We support efforts to ensure that money is spent transparently and accountably in line with the priorities of Nigeria’s own people but this does not make it acceptable for the IMF to determine Nigeria’s – or any other country’s economic policies”, the legislators said.

They therefore urged the US government to spearhead the return of Nigeria’s money to Nigeria’s people thereby signalling the US commitment to development and poverty reduction in Africa.

The Congressmen who signed the letter are; Donald M. Payne, Maxine Waters, Melvin Watt, Charles B Rangel, Edolphus Towns, Elijah Cummings, Carolyn Kilpatrick, William Jefferson, Julia Carlson, Major Owens, Danny K. Davis, Chaka Fattah, Gregory Meeks, Barbara Lee, Juanita Millernder-McDonald, Bennie Thompson, Albert Wynn, Sanford Bishop, Eddie Bernice Johnson and Bobby Rush.

Categories: Africa, Nigeria, Odious Debts

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