Official Creditors of Nigeria Agree To Restructure $23.4 Billion in Debt

Dow Jones Newswires 13dec00

PARIS -- Paris Club creditors agreed to reschedule $23.4 billion of Nigeria's external debt Wednesday, in a deal that will underpin support for the country's democratically elected president, Olusegun Obasanjo.

In a statement, the Paris Club -- which comprises official bilateral and multilateral creditors -- said the deal will reduce Nigeria's service payment on its debt to just $1 billion next year.

The deal comes four months after the Nigerian government signed up to a $1 billion landmark program with the International Monetary Fund, committing itself to further sweeping economic reforms.

In its statement, the Paris Club of sovereign creditors said the 20-year rescheduling will "make an important contribution to Nigeria's economic outlook."

The restructuring "will satisfy Nigeria's financing requirement from August 1, 2000 up to July 31, 2001," the club said.

Nigeria's deal with the Paris Club will come into force in mid-April -- as long as it stays on track with the IMF.

The debt agreement comes as a fillip for the Nigerian economy, which is struggling to recover from years of rampant corruption and chronic underinvestment under successive military regimes.

Elected last year, Mr. Obasanjo, himself the leader of a military junta in the late 1970s, has seen prospects for the economy improve sharply, thanks to the rise in international crude oil prices. According to the IMF, the Nigerian economy should expand by some 3.4% this year. GDP growth had sunk to just 1% in 1999.

Money owed to creditors in the Paris Club accounts for around three-quarters of Nigeria's external debt of close to $30 billion. Securing a restructuring agreement with the club was seen by investors as a crucial follow-up step to August's new 12-month IMF program.