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Germany Cancels $3bn Nigerian Debt

Posted by From Collins Edomaruse and Bolaji Adebiyi in Abuja on 2005/10/05 | Views: 350 |

Germany Cancels $3bn Nigerian Debt

* Germany Cancels $3bn Nigerian Debt
* France seeks quick resolution of PSI

Presdent Olusegun Obasanjo's anti-graft war and sustained campaign for debt forgiveness by creditor nations got a boost Tuesday night as Germany formally cancelled $3billion owed her by Nigeria.

Also France has expressed hope that the Policy Support Instrument (PSI) required by the Paris Club to begin negotiations on the debt treatment with Nigeria will be quickly settled so that the country could become the first beneficiary of a PSI.

Unfolding the good tiding to a large audience at the Shehu Musa Yar'Adua Centre, Abuja, where Germany had organised a dinner for a cross section of members of the diplomatic community and a robust number of Nigerian businessmen and politicians, to mark the 15th anniversary of the unification of Germany, the country's Ambassador to Nigeria, Dr. Dietmar Kreusel, said: "I am proud to say at this juncture that Germany alone irrespective of her own economic and budgetary shortcomings has agreed to cancel foreign debts of Nigeria in the tune of $3 billion."

Germany is a member of the Paris Club which in June granted Nigeria some 60 per cent reprieve on its external debt overhang of about $31 billion. As at December 31, 2004, Nigeria owed about $5.23 billion, representing some 17 per cent of its total Paris Club debt to Germany.

Kreusel said his country's gesture was a demonstration of Germany's endorsement of the reform programme of the Obasanjo administration.
He expressed admiration for Obasanjo's strides in the affairs of the country as well as his (Obasanjo's) quality leadership on the African continent.

"It has been a rewarding experience for us to witness to which extent President Obasanjo as chairman of the Africa Union has tried to set a new pace for development in Africa, how he has helped to prepare this continent, being the cradle of mankind, to meet the great challenges of the 21st century and to secure for Africa its rightful position within the one and only one omni-comprehensive organisation world wide, the UN-System, capable of better governing, developing and securing peace, stability and economic progress."

He eulogised what he termed the unwavering support of Nigeria in German course and stated: "As the German President stated here in this building last year, we put our trust in Nigeria and hope that this important and blessed country in West-Africa with its tremendous potentials on the surface as well as below will be able to maintain peace and stability at home and within the region.
"We also hope that Nigeria will continue to develop its economic resources and that its government remains determined to guide Nigerians along the difficult path of democracy and the rule of law.

France has, however, expressed hope that the PSI required by the Paris Club to begin negotiations on the debt treatment with Nigeria will be quickly settled so that the country could become the first beneficiary of PSI.

In a statement to THISDAY, the French Embassy in Abuja noted that "France, being the president of the Paris Club as well as the second creditor of Nigeria with a sum of about 6.2 Billion USD, played an active role in the recent agreement in principle, on the debt relief granted to Nigeria by the Paris Club.

“However, a preliminary condition demanded by the Paris Club before engaging in negotiations on the modalities of the relief, is the signing of a “Policy Support Instrument” with the IMF, a new type of accord with no payment by the Fund, but expressing its approval of economic politicies led by a country and commonly deciding on the criteria of evaluation of results of the politicies that will be regularly assessed.

“The principle of the creation of this new instrument was already favourably examined by the Fund’s Board, but no formal decision has been taken yet. One can hope that this will be quickly settled, what could enable Nigeria to become soon after the first beneficiary of a PSI.

“The condition having thus been met, final negotiations with the Paris Club and each member country can start."

The embassy said its envoy to Nigeria never said as reported by THISDAY Tuesday that the debt relief process may be delayed.

"Indeed, the ambassador of France, Mr. Yves Gaudeul never said to the journalist during the interview he granted that the debt cancellation process will be delayed. He just explained that it is a long process," the Embassy said in the statement.

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