Posted by By Martins Oloja and Kayode Ogunbunmi, with Agency reports on
Hopes of a speedy resolution of Nigeria's debt problem fizzled out yesterday when Finance Ministers of the Group of Eight industrialised nations excluded it from the list of 18 countries to benefit from 100 per cent wipe-off of their debt.
Hopes of a speedy resolution of Nigeria's debt problem fizzled out yesterday when Finance Ministers of the Group of Eight industrialised nations excluded it from the list of 18 countries to benefit from 100 per cent wipe-off of their debt.
The country had waged a long and sustained campaign for this consideration and its exclusion is bound to leave sour taste in the mouth of Nigerian officials, although ministry of finance official told The Guardian at the weekend that Nigeria did not qualify because it was not one of the countries under the Heavily Indebted Poor Country HIPC programme.
Government officials in Abuja yesterday were however upbeat as news filtered in that the G-8 rose from their meeting in London yesterday with "an understanding that they would give Nigeria debt relief."
Nigeria's Finance Minister, Dr. (Mrs.) Ngozi Okonjo-Iweala who called and broke the news to The Guardian yesterday simply said the development is "a monumental achievement."
She said though details were still sketchy at press time, the G8 Finance Ministers "have agreed to give us a fair and sustainable treatment."
When The Guardian got to the G7-8 website, at press time, there was no specific mention of any deal on Nigeria beyond the details of the Highly Indebted poor countries.
Accordingly, she might only enjoy concession under a special arrangement called EVIAN, for middle income countries.
The debt agreement reached by the ministers also includes provision of help for another nine countries who will benefit from debt relief in 12 to 18 months. A total of 38 countries could get write-offs at the end of the initiative.
The 18 beneficiary countries are: Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia.
Treasury officials said this money would be enough to wipe out debts owed to international organisations by 18 countries, which are at the so-called completion point of the IMF and World Bank initiative for HIPC. Completion point is the date when the scheme's debt write-off becomes effective.
G-8 officials drafted the statement announcing the package after having agreed on debt relief and committed additional resources for the World Bank, the International Monetary Fund and the African Development Bank, said a member of a European delegation, who spoke on the condition of anonymity. The IMF will also tap into its own resources such as proceeds of past gold sales, the person said.
The deal came after intense discussion among the group and invited developing countries.
Britain and the U.S. wanted to pay for the debt of up to 27 countries, with 18 qualifying for such help immediately. Germany, France and Japan are concerned that such action would leave the World Bank short of cash in the future because it would miss out on interest payments. They are also seeking assurances that the countries that are helped won't quickly draw up debt again.
The G-8 official said that a package will include debt relief on loans owed to the International Monetary Fund, the World Bank and the African Development Bank. Under these proposals, the U.S. would make bigger contributions to the World Bank than other G-8 nations, and provide no additional money for the IMF.
Other G8 nations would, in exchange, increase their contribution to the IMF to make up for the lack of U.S. contribution. The agreement would help overcome opposition from US lawmakers to making greater contributions to the IMF.
The $18 billion owed to the World Bank, International Monetary Fund and ADB are worth $40 billion when interest is added over the lives of the loans. About $6 billion owed to the IMF may get relief under U.S. and U.K. plans, using revenue already on the lender's accounts from gold sales carried out in the 1990s.
Officials from the G-8 states, which include the U.S., Japan, Germany, the U.K., France, Italy, Canada and Russia, worked through the night to find ways for the multilateral lenders to get the interest payments they might otherwise lose out on if debts are repaid. France wanted lenders to boost future loans as well as relieve debts now.
The meetings in London this weekend will lay the groundwork for the summit in Gleneagles in which the U.K. will also seek to boost aid to developing nations and pull down trade barriers, objectives it set out earlier this year along with debt relief.
African nations currently spend up to 40 percent of their budgets on debt repayments, more than on health or education, according to DATA, a Washington-based advocacy group co-founded by Bono, the lead singer of the rock bank U2.
Germany, France and Japan wanted to tie some conditions to 100-percent debt relief. The German Finance Ministry estimates its plan will cost about 1.5 billion euros ($1.84 billion), a fraction of Brown's plan. The three countries also want to restrict relief on multilateral debt to a limited group of poor countries struggling to make payments, Koch-Weser said yesterday.
Other states, some 18 within a group of highly-indebted poor countries drawn up in 1999, are able to service debt, he said. Germany and its partners had recommended that lenders manage the debt of five countries -- Mali, Mauritania, Niger, Ethiopia and Guyana --and tie debt relief to progressive fulfilment of ``good governance'' criteria, Koch-Weser said.
``We need poor-state debt relief and I think we can achieve it in the U.K. G-7 presidency,'' said Koch-Weser in an interview yesterday. ``But there are moral and budgetary dimensions. We will try to avoid being steamrolled by the U.K. and U.S.''
"The G8 finance ministers have agreed to 100 percent debt cancellation for Heavily Indebted Poor Countries," Brown told a news conference in London.
Aid agencies and African nations welcomed the deal, saying it would save the 18 countries a total of $1.5 billion a year in debt repayments.
"A real milestone has been reached," U.S. Treasury Secretary John Snow said. "President Bush's commitment to lift the crushing debt burden on the world's poorest countries has been achieved. This is an achievement of historic proportions."
Reactions from across Africa, however, have been mixed.
"It is incredible. I did not expect this to happen. It sounds like a fairy tale. They (rich nations) now mean what they say. I am very delighted with the decision," said Zambian Finance Minister Ng'andu Magande, clapping as he watched Brown's announcement on satellite television at his home in Lusaka.
"This is an important decision that means we can have more money saved from debt servicing being directed to education, health, infrastructure and social sectors," Mozambique Prime Minister Luisa Diogo told Reuters in Maputo.
Some of those interviewed, Reuters said, saw the package as fuelling investment in their countries, for long viewed with scepticism by an international investor community wary of their political stability and their economic management styles.
Some officials said whether they eventually got a cent from the debt relief package depended on whether their governments continued to fight corruption and promote internal growth to expand exports to industrialised nations.
"(Debt cancellation) ... cannot work if African governments do not adhere to fiscal discipline, a critical phase in the management of a country's resources," Malawi treasury secretary Milton Kutengule told Reuters in the commercial city Blantyre.
Tanzania, one of the countries that has received billions of dollars in relief over the past few years, was ecstatic while Kenya, which says it needs relief but is punished for its ability to meet its debt service obligations, was critical of the criteria for selection of beneficiary countries.
"Those faithful in servicing their debt like Kenya are being ignored while HIPC (Highly Indebted Poor Countries) who have failed to service the debt are getting more attention. This is not good for Africa," Kenyan Planning and National Development Minister Peter Anyang Nyongo told Reuters in Nairobi.
"If countries with economic potential like Kenya are forgiven their debt, it will help to pull up the other countries in the region to grow their economies. Concentrating on HIPC countries is not a very progressive thing to do," he said.
Tanzania's Finance Minister Basil Mramba said his country appreciated the debt relief it currently got but wanted more. He said Tanzania spent 12 percent of its state budget - a small fortune for a poor state - servicing debt, cash that could be moved to other areas to grow the economy and improve lives.
Magande said he had plans for the extra cash in his purse if Zambia won further relief: recruit 7,000 new teachers waiting for employment since leaving college in the past several years and next year employ all teachers out of work; then scale up provision of life-prolonging AIDS drugs to those who need them.
Magande said he would seek better working conditions for Zambian doctors and nurses to stop a steady haemorrhage, mainly to wealthier South Africa, the UK and the United States.