After Debt Relief, What Next?

by Sam Kargbo

Nigeria has finally bought itself out of the entire debts it owed to the Paris Club. The country has literally secured its monetary independence and it is now free to chart its own homegrown economic course. By this feat it has become the first African country to free itself from the Paris Club and the intrusive supervision of the International Monetary Fund. This achievement did not come easy.For obvious reasons, Nigeria could not extricate itself from the debt quagmireearlier than now. The countries that comprised the Paris Club, which incidentally have considerable voice in the International Monetary Fund and the World Bank were reluctant to relax their hard line position on Nigeria’s debt. Capitalizing on his international stature and contacts, President Olusegun Obasanjo made debt relief a constant item on the agenda of the several diplomatic shuttles he made across the globe since he assumed office as Head of State and Commander in Chief of the Federal Republic of Nigeria in 1999.

Whereas the President and his team of monetary advisers who had worked over the years to achieve the debt buyback feel that they deserve to have unlimited commendation from Nigerians for what they consider as a historic feat, some critics believe that the debt buyback was a rip-off. This later group preferred Nigeria to have opted for a confrontational repudiation of the debt instead of transferring US$12billion in one fell swoop to the very countries that have been unconscionably milking the country under unfair economic relations occasioned by the killer debts themselves. In other words the critics consider unwise the decision to pay the Paris Club upfront that whopping sum of money.

On our part we are happy that Nigeria has at last been able to get through the debt burden. The country is now in a solid position to formulate and implement its own homegrown economic and political reforms. Besides the pressures and directives of its erstwhile creditors, Nigeria has in the words of one of its legislators been spending four times as much on debt service as it was spending on education and 15 times as much as it was spending on health. What this means is that the country was forced to neglect such vital sectors as education and health because of the obligation of serving its debts.Billions of dollars are annually slashed away from the country’s revenue to service ever increasing debts. Money that would have been put into uses that would expand the economy and service delivery capacity of the government was annually paid away to the Paris Club. By some economic ingenuity the Paris Club was able to entrap Nigeria into a never ending and ever increasing debt.

It is from this point of view that we believe that the debt relief now offers the country a lifetime opportunity to be its own economic and richer master with the liberty to formulate and implement only those economic policies that would enhance accelerated growth and sustainable development. The strive to reposition Nigeria economically and make it take its rightful place in the comity of nations is now clarified and given a positive definition. The country now stands the chance of achieving macroeconomic stability, as it would no longer be hampered by the burden of debt service. More money would now be available to the federal and state governments to pursue meaningful economic policies. On their part, Nigerians are now exceedingly justified to put their governments to task. They now have more reasons not to tolerate excuses from the various tiers of government over the poor nature of the infrastructures in their various domains.

It is our hope that this government and successive ones would seize this welcome opportunity to set off and pursue economic reforms that would add value to governance and improve public service delivery. We also believe that Mr. President would not consider the debt buyback as a mere political victory. In our view, it places a burden on him to explain the benefits of the buyback with concrete economic and structural reforms that would instantly impact on the lives of the masses. The opportunities provided by the debt buyback should serve as a catalyst for the much needed speedy and sustained development. If they remain in the hands of government, the time is now for public utilities to answer to their names as providers of essential services to the people. Now is the time for the country to solve the riddle of the incessant electricity shortage in the country. As the protagonist of the debt buyback, Mr. President now has the opportunity to implement a disciplined fiscal policy that would prevent a throw back to those days and practices that generated the killer debts. As warned by the IMF, the country should have a clear break from the imprudent policies of the past. The federal government should endeavour to win over the state government to a crusade for prudent fiscal regimes that would promote robust macroeconomic policies that will strengthen the private sector. Sustained efforts should be made to diversify the economy. Agriculture should be given the desired attention. The country should and must start thinking of having or living a life without petroleum.

The debt buyback gives the country the deserved permanent sovereignty over its resources. The economic lease of life has afforded the country to borrow a leaf from China and India who have fast tracked the economies with homegrown economic policies. The country can now look to China which has made a brilliant and irrefutable case for indigenous developmental patterns that take into consideration local peculiarities. We know that the debt buyback and relief were secured with the understanding that the country would continue to work with the IMF under a Policy Support Initiative by which the IMF will continue to support the country in the articulation of sound economic policies that would attract among other things foreign investment. Even at that, we warn that the PSI should not serve as a façade for the continued interference of the IMF in the domestic life of the country. The IMF as it has come be known in this part of the world is a sharp knife with which the west cuts deep into the economies of third world countries.

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