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Nigeria Debates Payment on Foreign Debt


Nigeria's Senate has approved legislation saying that Nigeria will pay its foreign debt obligations this year, but the House of Representatives says it wants the country to stop servicing its $35 billion foreign debt.

Nigeria's House of Representatives passed a non-binding resolution criticizing foreign creditors for failing to give Africa's most heavily indebted country debt relief and demanding that the government stop paying its foreign debt.

The Nigerian president, Olusegun Obasanjo, told members of parliament that he shared their frustration at the continued debt repayments, but needed more time for discussions on debt cancellation to work. Mr. Obasanjo said he did not have the authority to order a halt in foreign debt repayments.

Africa economist, Andrea Bohndstedt, says Nigeria loses around 60 percent of its budget in corruption and mismanagement. By contrast only an estimated 20 percent is devoted to debt servicing.

"You could argue if you tidy up your domestic spending and prevent money being lost through corruption then you would actually will be very well able to service that debt," he said. "And you often have this argument, that you can't hold a country that's got such huge development needs responsible for debt that was incurred under a previous dictatorial regime where money was outright stolen. But I think on the other hand what the Nigerian government also needs to consider that it is a borrower."

The spokeswoman for the Nigerian president, Remi Oyo, said that Mr. Obasanjo had worked hard to show the international community that his government is fighting corruption, and that money saved from servicing the debt would be spent on poverty reduction.

Spokesperson Stephen Rand of the international debt cancellation campaign, Jubilee Debt, says that Nigeria is in a very difficult situation because it is not part of any formal talks to write off its debt.

"Nigeria has the largest debt of any country in Africa, it has more poor people than any other country in Africa and clearly money should not be leaving the country to pay off ancient debts when it could be used to save lives," he said.

International donors remain wary that Nigeria, one of the world's biggest oil exporters, is carrying out adequate reforms. World oil prices remain at an all-time high, leading many creditor institutions to argue that oil rich Nigeria has the money to continue servicing its debt.

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