Posted by Oluyinka Akintunde and Tobi Soniyi, Abuja on
The Federal Government will on Monday (today) pay the $6.4billion arrears owed the Paris Club, according to the Minister of Finance, Dr. Ngozi Okonjo-Iweala.
The Federal Government will on Monday (today) pay the $6.4billion arrears owed the Paris Club, according to the Minister of Finance, Dr. Ngozi Okonjo-Iweala.
Speaking in Abuja on Sunday, she said the decision to pay the arrears, followed an instruction by President Olusegun Obasanjo that the death of his wife, Stella, and victims of the Bellview plane crash should not disrupt ongoing work on the debt repayment.
The repayment of the arrears is one of the conditions prescribed by the Paris Club for Nigeria to enjoy a 60 per cent debt relief.
A Nigerian delegation to the group's meeting, between October 17 and 20, signed an agreement on the debt deal.
Our correspondents learnt that 15 out of the 19 countries making up the club will benefit from the N6.4billion being paid up by Nigeria.
Okonjo-Iweala said, 'We have done the necessary work before now and the October 31 date for the first payment is still very much on. The President wanted work on the debt issue to continue until it is concluded, in spite of the difficult situation the nation is going through.
'We are mourning as a nation. There is no doubt that the tragedies of last week have really shaken the nation. But it is the President's wish that work continues. He is leading by example to demonstrate that we should march on, and that is why we are continuing with the implementation of the debt deal with the Paris Club."
Prior to the plane crash and the death of his wife, the President met with the leadership of the National Assembly to get consent for the release of funds for repayment of the debt.
A source confirmed that he sent a bill to the Assembly on the repayment.
Nigeria owed the club $30.847billion as at December 31, 2004, comprising an outstanding principal of $25.199billion and arrears of $5.648billion.
The agreement signed with the group in October seeks to implement the debt treatment framework for Nigeria announced on June 29, 2005.
The agreement is a follow-up to the approval by the Executive Board of the International Monetary Fund of the Policy Support Instrument on October 17, 2005. It includes a debt reduction under the Naples terms on eligible debts, and a buy-back at a market-related discount on the remaining eligible debts after reduction.
A statement from the club after its meeting said, 'This agreement will be implemented in two phases in consonance with the implementation of the PSI. In the first phase, Nigeria undertakes to pay arrears due on all categories of debts, and creditors (will) grant a 33 per cent cancellation of eligible debts.
'In the second phase, after the approval of the first review of the PSI by the Executive Board of the IMF planned for March 2006, the Nigerian Government will pay amounts due under post-cut off date debt while Paris Club creditors will grant a further tranche of cancellation of 34 per cent on eligible debts, and Nigeria will buy back the remaining eligible debts.
'In total, this agreement allows Nigeria to obtain a debt cancellation estimated at $18billion (including moratorium interest) representing an overall cancellation of about 60 per cent of its debt to the Paris Club of around $30billion."
Nigeria is expected to pay $12.4billion, representing regularisation of arrears of $6.3billion, plus a balance of $6.1billion to complete the exit strategy.
THE PUNCH, Monday October 31, 2005