Nigeria vows to track use of debt relief funds
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Nigeria will set up a monitoring system to make sure $1bn a year saved in a debt deal with its main bilateral creditors is kept for health, education, agriculture, power and water supply, according to Ngozi Okonjo-Iweala, finance minister. The scheme is meant to answer concerns about potential misuse of funds from additional aid and debt relief for Africa, plans for which were at the centre of yesterday’s G8 summit conclusions. Mrs Okonjo-Iweala, a former senior World Bank official, said the UK’s Department for International Development - a key backer in securing the deal - and the World Bank were helping to establish a tracking mechanism to ensure the savings are channelled into priority spending sectors. Nigeria wants to use the same system to oversee all other expenditure needed to meet the United Nations’ Millennium Development Goals of halving poverty by 2015, estimated to require a further $3bn-$4bn a year over the next decade. Nigeria, with the largest foreign debt of any African country, last week reached a preliminary deal to settle $30bn owed to the Paris Club group of rich countries. Under the proposed package, which includes clearing arrears of about $6bn and buying back part of the outstanding debt, creditors are expected to write off 60 per cent of the total, or $18bn. Nigeria will finance the remainder from its windfall earnings from higher oil prices, which have enabled it to build up its foreign exchange reserves to $21bn. The breakthrough deal, due to be finalised in September, will leave it with foreign debts of about $5bn. It is separate from a decision to cancel $40bn of multilateral debt owed by 18 poor countries, 14 African. In an interview with the Financial Times, Mrs Okonjo-Iweala said Nigeria was not seeking relief on its multilateral debt with the World Bank or other institutions. As an oil exporter, it did not expect much more aid than it already received - about $2 per head a year, the lowest in sub-Saharan Africa. The Paris Club agreement is pegged to International Monetary Fund approval of the government’s economic reform package, which includes commitments to improve governance standards, public finances and promote deregulation. Mrs Okonjo-Iweala promised the government would send a draft Fiscal Responsibility bill - requiring greater accountability in the management of central government and local state finances - to the national assembly “as soon as possible”. Nigeria was counting on continuing high oil prices to finance its side of the deal with the Paris Club and provide additional funds for health and infrastructure. “We don’t have any other source,” Mrs Okonjo-Iweala said, although the country hoped to diversify its economy away from oil to generate further revenue. Source : ft.com |