A: The completion of the deal, which will see Nigeria exit from $30 billion in Paris Club debt, is absolutely historic. In the short-term it will mean that the budget can focus more on promoting private sector growth and development. But the longer-term implications could be much more important. Debt has been hanging over President Obasanjo and is one of the major barriers to consolidating the aggressive reforms being undertaken by his economic team. This gives them momentum to push further, including the passage of the Fiscal Responsibility bill now before parliament.
Q: What is the background to the completion of Nigeria’s debt deal this weekend?
A: Nigeria had been trying to get debt relief since Obasanjo was elected in 1999. These efforts failed until last year when three things finally came together. First, the government started cracking down on corruption. Second, the country was reclassified by the World Bank as 'IDA only,' a technicality that kept them out of consideration for either HIPC or a favorable Paris Club deal. Lastly, the treasury was able to save oil revenues (reserves have risen from almost nothing in 1999 to about $34 billion today) which gave Nigeria the cash to put on the table to get the deal done."
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