. As multilateral lenders offer common framework for sustainability assessment
By Clara Nwachukwu
The Federal Government yesterday insisted that it has no plan to restructure its debt, while reiterating commitment to meeting all its debt obligations.
This is even as multilateral lenders like the World Bank Group (WGB), and the International Monetary Fund (IMF), say countries’ debt will be subjected to a Common Framework for sustainability assessments.
A statement issued by the Debt Management Office (DMO), in response to a report by Bloomberg, said the comment credited to the Minister of Finance, Budget and National Planning, Zainab Ahmed that Nigeria is planning to restructure its debt “was taken out of context.”
The statement reads: “Our attention has been drawn to the recent report by Bloomberg attributing the statement to the Minister of Finance, Budget and National Planning, that Nigeria is planning to restructure its debt. We wish to state that the minister’s statement was taken out of context.
“Over the years, Nigeria’s debt management strategy has always highlighted the need to utilize appropriate debt management tools to streamline the cost and risk profile in the debt portfolio.
“Towards implementations of these strategies, Nigeria has typically availed itself of concessional loans: the spreading out of debt maturities to avoid bunching; and, re-profiling of the debt maturities by refinancing shorter debt using long term debt instruments. All of these, none of which constitute debt restructuring, are already being implemented.
“The Nigerian government is also looking forward to exploring other appropriate debt liability management options, such as bond buyback and bond exchanges.
“We want to assure local international investors and creditors that Nigeria remains committed and will meet all its debt obligations.”
The Nigerian government is also looking forward to exploring other appropriate debt liability management options, such as bond buyback and bond exchanges.
No request to restructure
Meanwhile, the WBG Managing Director, David Malpass, said Nigeria has not requested for debt restructuring from international financial institutions as allowed under the Common Framework for debt treatment beyond the Debt Service Suspension Initiative (DSSI).
Malpass, stated this in Washington, at his opening press conference at the on-going annual meetings of the World Bank and IMF.
He added that any such request for debt relief from Nigeria will be subjected to an assessment of the country’s debt sustainability.
What we are appealing for is to make the Common Framework more attractive…. but we do not yet see other countries knocking on the door of the Common Framework.
Debt resolution mechanism
IMF Managing Director, Kristalina Georgieva, speaking generally on debt during her opening press conference for the meetings, said: “We are pressing for a more effective debt resolution mechanism. We want the Common Framework to become more predictable with guidelines and able to bring equality of treatment for all creditors, public and private.”
In particular, she said food insecurity and rising debt are the two biggest vulnerabilities that quite a large number of countries in Sub-Saharan Africa (SSA), which includes Nigeria, are exposed to.
In terms of the debt, she said: “And what we are appealing for is to make the Common Framework more attractive. We have now some modest successes with Zambia and Chad, but we do not yet see other countries knocking on the door of the Common Framework.
“Why? Because the process is not very predictable. It is like you are entering a tunnel. You do not know where the other side of the tunnel is. Because the way we bring all creditors is lumpy. You have the official creditors on one side. Then you have the private sector creditors.
“So, we have to expeditiously draw lessons from Zambia and Chad, what has worked and how, and then apply it to countries to get that response to that insecurity—to debt not being sustainable, to get response much more actively. I do hope during the meetings there would be huge attention paid and rightly so to this topic.”
