Foreign debt - the gift that keeps on taking



Independent Foreign Service

14 June 2001

Lagos - Nigeria might pay more than $43 billion to service its $13 billion debts to foreign creditor nations, Yusha'u Anka, the chairman of the reconstituted senate committee on local and foreign debts, told the inaugural meeting of the committee in Abuja yesterday. At the same time, the controversy over Nigeria's actual foreign debt figure continues.

Nigerian President Olusegun Obasanjo said recently that Nigeria's total foreign debt was $28 billion, while John Vereker, the permanent secretary of the British international development department, put the figure at between $30 billion and $35 billion.

Anka said Nigeria was expected to repay $2 billion each year over the next 20 years in foreign debt servicing under a controversial rescheduling agreement. "This ugly state of affairs is glaring if you take the case of Paris Club," he said.

"Nigeria borrowed only $13 billion, but has so far paid about $17 billion in debt servicing and yet we are still owing about $22 billion, due largely to compounding interest, accumulation of arrears and penalties on late payments."

Anka said no country in the world would survive by spending the bulk of its resources on debt repayment, arguing that if Nigeria went ahead to commit $2 billion to debt servicing each year, the development of education, healthcare, water supply, roads, electricity and other basic infrastructure would be neglected.

"About 84 million Nigerians are living under abject poverty due to serious neglect and destruction of the economy by decades of military misrule," he said, calling for absolute cancellation of all the country's foreign debts to stimulate development.

He regretted that the $1,5 billion appropriated to service foreign debts in the current fiscal year represented 30 percent of the country's total export earnings, three times more than the allocation to the education sector and nine times more than the budget for healthcare delivery.

Anka also condemned the failure of the country's finance ministry and central bank to reach agreement on the total owed, saying that while the ministry put the figure at $28,5 billion, the central bank said it was $28 billion. - Independent Foreign Service