Debt relief deal for Nigeria fades
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Hopes of a breakthrough debt relief package for Nigeria at a creditors’ meeting today were fading last night as smaller European countries refused to back a deal that had been agreed by the Group of Eight industrial nations. Jack Straw, the foreign secretary, was ringing his counterparts in European capitals to try to clinch an agreement ahead of next week’s G8 summit at Gleneagles, but privately officials in Whitehall believe it may now take until the end of the year to tackle Nigeria’s $36bn (£20bn) debt. Austria, Denmark, the Netherlands and Switzerland are all believed to have raised objections after the finance ministers from the G8 came up with a plan at their meeting this month. Under the deal, Nigeria would use the windfall from rising oil prices to pay off the $6bn of arrears it owes to its foreign creditors, and would then see its remaining debts cut by about two thirds. The west African country - seen by Britain as crucial to development in the region - would then buy back the rest of its debt to provide itself with a clean slate. UK officials expressed frustration last night at the delay in finalising the deal at the Paris Club - the body that represents creditor countries in negotiations with debtor nations. No details of the agreement were made public in the G8 finance ministers’ communique to avoid offending smaller European creditors, but some still feel they are being bounced into a deal. Britain, Nigeria’s biggest creditor, has been battling to persuade other G8 nations of the need for clemency and believed a deal was imminent. It has been championing debt relief after being impressed by the reforms being pursued by Nigeria’s president Olusegun Obasanjo and the finance minister, Ngozi Okonjo-Iweala. Sources close to the talks said fears that Nigeria would default had concentrated minds at the G8, which previously had been prepared to force Nigeria to adopt an economic package agreed with the International Monetary Fund before striking a deal. Under the terms of the G8 plan, Nigeria would have to submit to intensive surveillance by the IMF but would not have not to commit to a full IMF programme. Nigeria has had no new loans from the Paris Club since 1992 and has repaid $8bn. Despite that, it owes $14bn more than it did in 1992. |