Nigeria has got a reprieve from its debt obligations as the G-20 has agreed to grant debt relief to the world’s poorest countries. Nigeria will benefit from the development by virtue of its classification among the World Bank’s International Development Association countries. World Bank Group President, David Malpass, announced the debt relief during a press briefing at the ongoing virtual spring meetings of the bank and International Monetary Fund in Washington, United States.
The bilateral debt relief for the IDA countries will commence from May 1. Responding to enquiries by one of our correspondents, the Media Adviser to the Finance Minister, Mr. Tanko Abdullahi, said, “You will recall that the G20 is a group of countries and multilateral institutions like the World Bank.
“So we have some IDA loans with World Bank and some bilateral loans from China. Yes, we will benefit to the extent that the principal and interest repayments falling due which to our understanding is a debt service suspension (not forgiveness) until end of 2020. “The benefit for Nigeria will be the fiscal space created through debt rescheduling and interest payments which we are obligated to countries such as China and the World Bank.”
The IDA countries are poor developing countries which are eligible for concessional loans and grants. The World Bank and IMF had called for debt relief for the world’s poorest countries due to the severe economic impact of the COVID-19 pandemic, which has already set the global economy on the path of a recession.
Malpass said the debt relief would enable the countries to concentrate their resources on fighting the pandemic and its economic and social consequences. He noted that it was welcoming that China, one of the biggest creditors of the IDA countries, was part of the debt relief arrangement. “I take note that in the G-20 meetings, China is supporting the international agreement to allowing moratorium of debt repayments by IDA countries if they ask for forbearance.
“That’s very important because China is one of the biggest creditors and their participation in that effort is important and was very welcome.” The World Bank Group President also disclosed that a system would be set up to monitor how the countries would utilise the funds made available by the debt relief. According to him, it is expected that funds freed by the moratorium will be invested on healthcare and other social welfare programmes.
He said, “If the government saves money by not paying creditors, there is an expectation that they use it for health, education, economic rebuilding, jobs and concrete ways to help the people of their country.” Although the list of the benefitting countries was not disclosed, the Ministry of Finance said Nigeria was among the beneficiaries.
Nigeria’s total external debt as of December 2019 is N9.022tn, which is 32.93 per cent of the total debt portfolio of N27.4tn. Out of the total external debt sum, the Federal Government owes N7.5tn, which amounted to 27.50 per cent, while the states and the Federal Capital Territory owe N1.4tn, about 5.43 per cent of the total debt portfolio.
The external debt includes loans from multilateral organisations such as the World Bank and African Development Bank. Nigeria also has outstanding bilateral loans from China, France, Japan, India and Germany. Meanwhile, a communique issued by the Development Committee from the World Bank/IMF Spring Meetings, 2020, has called for decisive action and innovation in tackling the impact of the COVID -19 pandemic. Parts of the communique, released on Friday, said, “The COVID-19 pandemic underscores that the development community increasingly faces global challenges requiring decisive, collective action and innovation.”