We Won’t Seek Debt Relief For Nigeria’s N31trn Debt—FG

The Federal Government has said it would not considering the option of debt relief that is currently being considered for low income countries by the International Monetary Fund.

The Minister of Finance, Budget and National Planning said this on Tuesday in Abuja during the public presentation of the 2021 budget.

Nigeria’s total public debt stock had in recent times being on the increase as a result of the drop in revenue generation.

The debt stock increased from N28.628trn ($79.303bn) as of March 31, 2020 to N31.009trn ($85.897bn) by June 30, 2020, statistics released by the Debt Management has said.

The increase in the debt stock by N2.381trn or $6.593bn was
accounted for by the $3.36bn Budget Support Loan from the International
Monetary Fund, new domestic borrowing to finance the revised 2020
Appropriation Act including the issuance of the N162.557bn Sukuk, and
Promissory Notes issued to settle claims of exporters.

The International Monetary Fund had approved a second debt service relief of six months for 28 low income countries.

The Washington based lender said in a statement that the approval was made by it’s Executive Board on October 2, 2020.

The moratorium granted under the Catastrophe Containment and Relief Trust, would help the benefiting countries concentrate on fighting the economic impact of the Covid-19 pandemic.

Africa has the highest number of those benefiting with about 18 countries eligible for the six-month debt service relief.

The IMF stated that the debt service relief covers the period October 14, 2020 through April 13, 2021.

The multilateral lender had on April 14 this year approved the first six-month relief which lasted between April 14 to October 13, 2020.

The approval made in April enables the disbursement of grants from the CCRT for payment of eligible debt service which will be due to the IMF from October 14, 2020 to April 13, 2021, worth $227m.

Responding to a question whether Nigeria would take the option of the debt relief, Ahmed said that the government is not considering such option at this time.

She said currently, several loan agreements have been entered with various lenders adding that asking for debt relief would portend Nigeria as a country that cannot repay it’s indebtedness in the eyes of its creditors.

The IMF hopes the relief on debt service will free up scarce financial resources for vital emergency medical and other relief efforts as the impact of the pandemic inflicts economic pressure on the members.

Following the approval of the first relief, the IMF launched an urgent fundraising effort that would enable the CCRT to provide relief on debt service for up to a maximum of two years, while leaving the CCRT adequately funded for future needs.

The relief requires $1.4bn, however, donors have provided grant contributions totaling about $57.7m.

The donors include the UK, Japan, Germany, the Netherlands, Switzerland, Norway, China, Mexico, Sweden, Bulgaria, Luxembourg, and Malta.