Debt audit-nigeria-draft#3

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NIGERIA’S DEBT AUDIT NIGERIA: ORIGIN AND PROFILE OF EXTERNAL DEBT 1.0 EXECUTIVE SUMMARY The act of borrowing creates debt. External debt, therefore, refers to the resources of money in use in a country which is not generated internally and does not in any way come from any local citizens, whether corporate or individual. Debt is thus, a liability represented by a financial instrument of other formal equivalence. The World Bank (1998) describes external debt as the amount of money at any given time disbursed and outstanding contractual liabilities of residents to pay interest, with or without principal. Some theoretical development analyses contend that development projects can be financed successfully with externally borrowed funds. Thus, external borrowing is presupposed to augment domestic resources. Arikawe (2003) conceives debt financing as capable of ensuring faster and smoother growth of economic activities. However, it remains contentious that external borrowings facilitate development in developing poor countries, especially as exemplified by the Nigerian situation. Hence, some contemporary development scholars are gradually making conclusions that external borrowings impact negatively on the economic growth and development of poor countries like Nigeria. Amongst other factors, they point to the assertive and exploitative tendencies of the forces of globalisation in Africa and the rest of the South as responsible for ...

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• Publié par: Foil
• Nombre de lectures: 32
• Langue: English

Extrait

                  NIGERIA’S  DEBT AUDIT

REAINGIGINI :RORO PND AF  OLEFILANRETXE 1    TBED  ITEVS MU0.E EXUC e act of MARY    Thc gntaerrob iworxt Enaer dest.ebferohtretb , led thes toefere, rom fo secruoser a n  ise uiny ne ton neg tarei de uncoy tr icwhish sen toi  nna yawnternally and doic lacol ,snezit fmecoy y anm ro i   dn  ero au.lvidi her whetoratcorp  rtyreepia llibiuht a ,sbeD si tstrumntncialin y aifanestndeb Th. ceenalivqu elamrof rehto fo  s exribedesc98) (   91 aBknlr d eoW ant  aeyn vegiy sid emita desrubal dternas tebt omnueha m no tfo tili oesref desi stnp oti yaretn nd outstanding cnortcautla l   aiib aciteroeht emoS   ant enpmlovedel  w ti hrow tise,tal. ncip prihout nac  eb jorpstceuc ssscenafiedncnoetdnt lasysec lopment hat deve b ronrlagni oriw. Thundsexteus, ob yllanf deworr wiy llfu erxt   e th akew( 0230 ) occn c resources. Arigua tnemmod itseprs upessepotod  her motnd ser aaftsni gsnrufoe e blpacas  angcinanif tbed sevie ntious tns conte ti r   meia wovere ,ieit Hs. aicivctce fmonoworgo ht  espies,untrr co expm sa e  ll yceai Nie thy  bedfilinoitautis naireg rnal borhat exteaficilatoriwgn smeop int dteelevgnipoop ed nolev c   no ikgn oisnlcsut ex thaal bterngniworrotcapmi sivateg n tony el  .eHcn,es mo eocntemporary develempos tnlohc srae aradgrlluamay  p yeht ,srotcaf erth ostngmo Aa.lpio dxe enatrviassethe  to oint leveempoa htd dnc miowgr ehenoco  eiNegir irse l   ki or countnt of po s  athousionspre tser ehS eht fo  thehilere sre a of rlb e . W   htsi ofs he tor fs ceitatt evedneeicn  in Africa and t fo g   olabilasitno tot ac ffiufencinocecimotili eta stic resere domeern to s  uocrsea pilovedeo  twslohw ,seirtnuoc gnom fs frgainome laf patingc roie .nreccA idrot gnhio  im,a n rlwo  gidpsaley d a obom-and-bust patt aht sevratipac ts owfll on lvehalepod ve ,bOemtn (20adanobse04)   sfom raddnel sos and sutal flow fo ipacitalytilth, voe bimotyli at lacipgi hdnh ts aarkeal mancinif detargetni yglinasrenc iofd  s. Thus, ASUU (2nrtaoian lfeeftcesomc tid anteins htingiacifd tn al  c anci s wirise  nesdei f nieverteofe avltsuren fnoc tekh ecnedi orld  Ban pment (W fedevolganesto  tiutitll ad iet dnriehI ,ka FMts oagen be n toorevevp  )ahoisnexs a’rigeNi. ntempolevedrednu f i  fnatyihgn ,na002) opines that ilaeseit fo  eht bad d se  t on  rhepmronoetcenora yicacintrof cies os eht, dellac-is diomontisipo kool tni  itir lac inignd aito ors ecsso  ft ehp ormorphosiits metao etats eht ot slibinaaistsuunf  eni ehtferoytb f thon oentiterv rnte dalt,ebue d ot  un arebm fo factos, spiralldeo ev rht eeyras hi Ts. prtpore selifor’airegiNterns exebt al dkaniybt emc  gos  Ss.anloe thf  osmret eht  dna ye monowedborrith dew ancn sifmaem merarkwoonti falsni utitlagedna siders lport con ,ht eermilirayl hT    .)et troper e 19 (ntmedao  t99asjnO abevnr oog ief e ch egunOlus ewo t ,dp ehrgordirerstoam, ntout ehc uotnyrs’c  also identifies  ,htlAossg .wonimine exaportereehc ot desoppus   rrbos esklec rcktstasub s’d be t fying th y  identi nerrrp tht suc eig Niaerilofofe  eria Nigvernn go sotemtnlutar ge int pus  bcela p us  eht y evisseccappened to thesel wa shwci hewerexe rnte balroorgniwna shw dh ta    

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2.0 PROCESS OF INDEBTEDNESS   2.1   Briefing historical evolution of Nigeria’s external debt   Nigeria’s total external debt stock, as at December 31, 2005 stood at US$20,477.97 million as aga million in December 2004, indicatsine go fa  UdSe$cr1e5a,466.69 million or 43.03 percent. The significant red was as a result of the implementation of the first and second phases of the Paris Club debt deal, pre-cut off Paris Club debt by 33 percent after regeualrasr.i zAast iaolnl   aerrraao frs to the Paris Club have been paid, and no arrears are outstanding to any other external creditors, the entire external debt sto million comprises of principal balances (disbursed outstandingmdeeyra shta). Tbt siht sif ehtsri in we ty nttiia N gire has no arrears outstanding in its external debt stock (DMO: 2005).   The trend in Nigeria’s external debt stock and debt service over t-h2e0 0la5)s t hfaivs e byeears (200el wl n0 computed and documented by the c oMuanntrayg’es mDe (DMO). Nigeria’s total external debt stocnbtt Office at December 31, 2001 was US$28.347 billion. A significant portion of the stock consisted of ar interest, as well as the late interest, which had been ctohnes ocluidrraetnetd  ptroi nfcoirpmal  balance. Nigeria’s  external debt increased significantly between 2001 and 2004 despite the fourth rescheduling a Paris Club Creditors in 2000. The external debt stock as at December 2000, amiolluiontne, d to about  interest arrears of US$4.4 billion and late interest of over US$5.1 billion. So one could observe effect not only of principal and interest arrears, but also of late interest which is interest charge paymentsi (kAarwe: 20 03).   In terms of creditor categorization, the external debt stock in 2005 comprised US$15,412.40 milli owed to the Paris Club, US$2,512.19 million or 12.27 percent owed to multilateral institutions, US$ 7.04percent owed to the London Club, US$649.80 million or 3.17 percent owed to the Promissory US$461.79 million or 2.26 percent- Poawriesd  Ctlou bn oCnreditors (DMO:2003). (See ta bles 1 and 4).   External borrowing by Nigeria startheed    nhteli nurt eoc coltishl ruonianet sirB fo drdwatofos sa tehl .yT  borrowing was the 1958 World Bank loan which was used to finance the Nigerian Railways Extens loan was US$250 million and because not much borrowing toeo, kp pulbalicce  cinh atrhgaet s dweceraed relatively  small, averaging N3.2 million per annum and representing 0.2 percent of GDP (Obadan:2002).   In the 1960s when shortage of foreign exchange became one of the bottlenecks to national econ external borrobweincag me imperative for the country. During this era, Nigeria borrowed sparingly and  The reasons are varied. Immediately Nigeria attained independence in 1960, some laws gu borrowings were enacted. The Promissory eN oatneds   tcepleviyser detcane erewt Acs anLol naerE txtehnacrdinO 1960 and 1962. A backing fund for loan redemption was established under the Promissory Note the External Loans Act required that external loans be used for devedl foopr mlen onalregi to esmmraogPrt gnidna  governments. The 1962 Act was amended in 1965 to broaden the end use of external loans. Durin servicing was never a problem, hovering around 2% of exports. This cautious attitude prevailed th and most of the 1970s (Umoren: 2001)   However, these legal frameworks failed to deter successive governments, whether military or ci the external borrowing process. The country’s external debt was N82.4 millionm, ilNli4o3n 5a.2s   million an at 1960, 1965 and 1970 respectively. During these years, the values of exports were N337.4 mil and N885.4 million respectively. The external debt figures increased slightly to N349.9 million General MurtMaloah ammed took over the mantle of leadership (Fasipe: 1989) -1u9p 7t6o,   olna1 79er pd,ios isth were taken in relatively small amounts and were largely to supplement domestic resources fo  3 - -

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