THE Federal Government of Nigeria has stated that it is not currently engaging in discussions regarding debt forgiveness with China, emphasizing that Beijing is open to providing Nigeria with further loans and investing more in its economy.
This was revealed yesterday by the Minister of Foreign Affairs, Yusuf Tuggar,
For several years, Nigeria has proposed debt forgiveness at the United Nations General Assembly, but those efforts have yet to come to fruition.
At the recent 79th session of the UN General Assembly (UNGA) in New York, President Bola Tinubu, represented by Vice President Kashim Shettima, advocated for reforms in the international financial system, emphasizing the need for “comprehensive debt relief measures to facilitate sustainable financing for development.”
When asked if any of the multilateral or bilateral loans Nigeria secured were canceled at this year’s UNGA, Tuggar responded, “Under President Obasanjo, we benefited from debt forgiveness. It is a process, not just an event; it takes time, and for it to happen, you must be present and engaged. These outcomes do not occur overnight. The effects we experienced from the last debt forgiveness didn’t materialize from just one UNGA.”
According to the Debt Management Office (DMO), Nigeria’s external debt reached N56 trillion ($42 billion) as of March 2024, while its domestic debt stood at N65 trillion ($46.29 billion).
China is one of Nigeria’s creditors. When inquired about any negotiations with Beijing for debt relief, especially in light of Tinubu’s recent meeting with Chinese President Xi Jinping, Tuggar clarified that this topic was not under discussion.
Tuggar stated, “No, we are not discussing that with China. Looking at Nigeria’s debt-to-GDP ratio, we are not classified among the severely indebted nations. In fact, Nigeria is not in a precarious debt situation. China is, in fact, willing to lend more and invest further in Nigeria, especially in infrastructure development and other areas.”
The minister also mentioned that Nigeria plans to join BRICS+, a coalition of nine economic and political powers, at an appropriate time.
Historically, as of December 2004, Nigeria’s debt amounted to $36 billion (equivalent to N4.8 trillion at an exchange rate of N134/$1), with $30.84 billion of its external debt stemming from the Paris Club and various other bilateral and multilateral sources.
The Paris Club, established in 1956 and headquartered in Paris, France, is a consortium of official creditors, comprising countries like the UK, US, France, Germany, Japan, Netherlands, among others. Nigeria had borrowed funds for developmental projects from these countries, some of which were acquired prior to Obasanjo’s presidency.
In 2005, President Olusegun Obasanjo’s campaign for debt relief led the Paris Club to grant Nigeria a reduction of $18 billion from its outstanding $30.8 billion debt. As part of an exit strategy, Nigeria paid off $12.4 billion to the Paris Club creditors, which consisted of $6.3 billion in regularized arrears and a remaining balance of $6.1 billion.