Nigeria to clear $30bn debt

2006-04-18 19:32

Lagos - Nigeria will clear all its debts of some US$30bn to the Paris Club of Western creditors within a week, the first to do so in debt-laden Africa, the top official in charge of the country's debt told The Associated Press on Tuesday.

Nigeria was required to pay up debt service arrears and run an economic program approved by the International Monetary Fund in return for a combination of debt forgiveness and buy-back options that would free it of $30bn in debts owed the informal club of Western creditor nations.

Having met the initial terms, Nigeria got the approval of the IMF board that met in Washington on Monday for its economic reforms, a critical requirement of the debt deal, Mansur Muktar, head of Nigeria's debt managment office, told The Associated Press.

Muktar said: "That gives the green light for the final transaction, the repayment of the equivalent of $4.8bn."

Administrative processes to transfer the funds to creditors will be concluded by the end of this week, and by next Wednesday "we will conclude all the formalities and that will be it," he said.

That would make Africa's most populous country and biggest debtor the first on the continent to be completely rid of Paris Club indebtedness, Muktar said.

What's left of Nigeria's total foreign debt of $35bn is $3bn owed to multilateral agencies such as the World Bank and the African Development Bank, and $2bn to commercial creditors, many of them also close to liquidation under separate terms.

Most of the debts owed by oil-rich Nigeria came from loans taken in the early 1980s as oil prices fell and stood at $19bn in 1985.

At the end of 2004 it stood at $35bn, having ballooned through accumulation of debt service arrears and penalties slapped on a succession of corrupt military governments by the creditors.

Though Nigeria is the world's seventh-largest oil exporter, it is among the poorest countries in the world, with over 70% of its more than 130 million people living on less than a dollar a day.

The country exports some 2.5 million barrels of oil per day, making it the fifth-biggest source of US oil imports.

The debt exit program with the Paris Club, which required total payments of about $12.4bn by Nigeria, was made possible by earnings from a steady surge of world oil prices to record highs in recent years.

Nigeria in turn received a total cancellation $18bn of debts from the Paris Club creditors.

- SAPA