Posted by The Punch on
The Federal Government's steadfast campaign for a wholesale relief from the excruciating burden of external debt has finally resulted in an $18 billion write-off, or 60 per cent of the $30 billion liability accumulated over the last 25 years.
The Federal Government's steadfast campaign for a wholesale relief from the excruciating burden of external debt has finally resulted in an $18 billion write-off, or 60 per cent of the $30 billion liability accumulated over the last 25 years. The gesture by the Paris Club of creditors is a launch pad for a 'comprehensive debt treatment" that requires an immediate down payment of $6 billion, a further debt buy-back of $6 billion toward the eventual erasure of the entire debt stock.
It is no doubt a pleasant development to Nigerians at large, and an expression of empathy and confidence by the international community in the homegrown policy, the National Economic Empowerment and Development Strategy, NEEDS. Many Nigerians are, therefore, pleased to salute President Olusegun Obasanjo and his team for the landmark achievement, which is a cumulative result of six years of what initially appeared to be fruitless foreign trips to persuade unyielding creditor nations.
However, the impact of the nation's problems must not be lost in the current euphoria. Of particular importance is the need to right-size the unwieldy public sector that does not only currently consume more than 80 per cent of annual budget outlay, through recurrent expenditure, but also remains the bastion of graft, ineptitude and a drain on aggregate national income. Equally instructive is the realization that the debt stock was, in the first place, accumulated under an environment in which government had its fingers in every facet of the nation's economy. It is, therefore, imperative that the current privatization and economic liberalisation programme be pursued vigorously with visible transparency and credibility in order to wean government off direct control of the economy.
Indeed, it is heartening that the relief from debt cancellation has been earmarked for the resuscitation of critical sectors like education, health, and power supply. That promise by the President should assuage the fears that the dividends of the debt pardon may not percolate to the grassroots. But the government should also go further by taking deliberate steps towards settling significantly, genuine domestic debts owed contractors, through appropriate and workable provisions in the 2006 fiscal year. This would go a long way to complement external debt relief, reflate the economy, and reduce high unemployment level.
As regards compliance with the conditions attached to the debt cancellation gesture, FG should, in the spirit of true federalism, liaise with, and gain the confidence of the federating units in mobilizing funds from the Excess Crude Oil Revenue Account to meet the conditionalities. The preference of the President for a final and total settlement of the entire debt overhang is a commendable step that should be supported by other stakeholders in the Federation Account. The nation should take advantage of the prevailing good price of crude and the mounting oil windfall accruals to exit finally from the debt trap. Such once-and-for-all settlement will also enable the nation to enjoy substantial discount on the debt buy-back scheme.
Above all, the debt relief has, no doubt, given the country a new lease of life to develop appropriate economic policies that will focus on small, medium enterprises to boost the domestic economy. But the fresh page opened by the debt pardon must no longer be soiled by profligacy. All tiers of government must now be restrained from embarking on fresh rounds of reckless borrowing from usurious international lenders. As promised by the President, a stringent fiscal responsibility framework spelling out the most prudent sources of funding development projects should be quickly put in place, while public sector corruption should be tackled more vigorously.
The PunchTuesday, July 12, 2005