Niger reaches Completion Point

By Hannah Bargawi, Jubilee Research at nef
19 July 2004

On 8 April 2004, Niger, one of the poorest and profoundly indebted Sub-Saharan African countries, reached its completion point under the “enhanced heavily indebted poor country” (E- HIPC) initiative[1], the latest World Bank and International Monetary Fund (IMF) scheme to achieve debt sustainability for the world’s most indebted countries. Debt reduction for Niger of 53.5 percent (or US$ 521 million in net present value (NPV) terms) under the E-HIPC programme is welcomed by Jubilee Research, although this will not prove sufficient to ensure that one of the least developed countries in Sub-Saharan Africa reaches its Millennium Development Goals (MDGs).[2] Only Sierra Leone scores worse than Niger in the “Human Development Indicators” (2003), the United Nations’ measure of development. Poverty is widespread with 61.4 percent of the population living on less than one dollar a day and a 38 percent chance of dying before the age of forty.[3]

Though the country’s debt service payments appear relatively small at $31.13 million in 2003 and rising over time, Niger’s debt remains fragile and unsustainable even after the “topping-up” of debt relief ($142.5 million) provided by the IMF and World Bank earlier in the year, following lengthy debate and strong opposition from within these organisations. Niger’s economy is dependent on uranium as its main export and has seen a 28.4 percent drop in the price of this commodity over the last 6 years[4]. This has combined with an overall downward trend in world interest rates, used to calculate the net present value of debt, thereby causing Niger to miss its debt sustainability target of 150 percent debt to export ratio. In order to meet this target, set by the international financial institutions as one of the main indicators of debt sustainability, Niger was in dire need of the much debated “topping up” of debt relief.

Niger’s debt stock has been reduced from $1.146 billion at the end of 2002 (NPV terms), before any debt relief mechanisms were in place, to $433 million following the E-HIPC topping-up and completion point assistance. Niger appears to have performed reasonably well according to the IMF’s standards of macroeconomic and structural performance, meeting 9 of it 13 completion point triggers, opening the doors to the final tranche of debt relief. Nonetheless, the recent disintegration of the uranium price, political instability in neighbouring Côte d’Ivoire and the 2001 drought indicate that Niger’s economic performance continues to be fragile and unpredictable. Furthermore many of the policies that form part of the IFI conditionality are arguably not in the best interests of Nigeriens or their economy. Trigger points for further debt relief call for the privatisation of the telephone, water and electricity companies, while on the macro economy-side, a contained budget deficit below 2% is recommended.

In order for Niger to target the poorest and invest in health and education to meet its MDGs, a much greater donor effort is needed providing comprehensive debt relief rather than piece-meal efforts, conditional on neo-liberal policies and subjective targets.