PUBLIC DEBT MANAGEMENT IN NIGERIA
PUBLIC DEBT MANAGEMENT IN NIGERIA
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Date
1997-10
Authors
ISYAKU, ALIYU
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Abstract
Debt can provide a healthy source of funding economic developments if
proceeds are wisely used and economic benefits exceeds costs of debt service.
Unfortunately, Nigeria has mismanaged her debt - both external and domestic - and
this has created a vicious and debilitating cycle, which we may refer to as a
debt trap.
As at 1995, Nigeria's internal debt burden reached N415.9 billion. On the
external debt front, Nigeria currently owes about $30 billion (including arrears)
which roughly equals GDP and requires about 40% of total export earnings to
service. Given the present state of the economy and Nigeria's erratic track
record in settling external obligations, this debt burden cannot be supported.
Furthermore, it is responsible for several side effects such as:
* reduced inflow of foreign direct investment,
* reduced short term credit lines (by banks and suppliers), and development
financing funds (by export credit and multilateral lenders),
* damaged external credibility in the eyes of foreign creditors and danors,
* lax fiscal management and discipline, resulting in inflationary pressures
* capital flight and speculations against the Naira, and
* persistent and rapid devaluation of the Naira.
The methodlcgy used for the purpose of collecting data for this sutdy was
purely secondary, the method of analysis is descriptive. It is clear that
Nigeria needs to pursue debt relief rather than continue with debt rescheduling,
which only postpones the inevitable. It is also clear that Nigeria's external
credibility and past tract record make it imperative to develop a medium term
strategy acceptable to external creditors and implementing the required policy
reforms with the degree of discipline and transparency which will rebuild
external support and confidence.
In addition to negotiating the required IMF standby, Paris club
negotiations will need to be approached with full recognition of the commitments
necessary to qualify for Toronto, Enhanced Toronto or Trinidad terms. We
certainly face an uphill negotiating task and must negotiate in the expectation
that debt relief must be earned and will be received only after successful
performance has been achieved.
Debt relief will require successful implementation of an acceptable medium
term economic reform programme over a period of two or three years.
Description
Being a Research Project submitted to the Postgraduate
Ahmadu Bello University, Zaria in partial fulfillment of the
requirements for the award of the Degree of Masters in
Business Administration (MBA).
Keywords
PUBLIC,, DEBT,, MANAGEMENT,, NIGERIA