PUNCH

Nigeria enters fresh N359bn external debt

Nigeria has entered into a new external debt of about $3.0969bn (N359bn), the Debt Management Office has said.

The new debt burden is coming after the country exited a Paris Club debt of about $30bn.

Under the new debt portfolio, Nigeria owes multilateral agencies, mainly the International Development Association, about $2.4bn, while bilateral non-Paris Club accounts for $718bn, documents from the DMO said on Thursday. Rising oil prices had helped Nigeria to get off the hook of Paris Club in 2006, after the country negotiated and paid $12.2bn out of the about $30bn debt.

The DMO said the new external commitments accumulated over the period of between 2001 and 2006.

”China emerged as a new creditor with a commitment of $510m in 2002 and a further $208m in 2006 for the telecommunication support project,” the DMO said.

Chinese influence in Africa has been on the upswing as Beijing is seeking raw materials and commodities like gold and oil, among others, from Africa to meet its industrial growth.

Last year, China and Nigeria inked series of agreements in a bid to expand growing bilateral ties. The deals saw Nigeria granting China four drilling licences in exchange for commitments to invest $4bn in oil and infrastructure projects.

While acknowledging the need to build infrastructural and power base of the economy, the DMO warned states and the Federal Government not to initiate new debt in such a manner as to threaten debt sustainability.

”Particular attention should be paid to the socio-economic impact of the project and the way this enhances the economy‘s ability to repay the loan taken,” the DMO warned.

It said cost benefit analysis should be carried out prior to taking the loan in order to ensure that the debt delivered good value for money.

While canvassing for the diversification of the economy base, the DMO said the mono-economy of the country, which primarily revolved on oil revenues, might not be sustainable in times of oil price shocks.