By Tosin Olatokunbo
The World Bank has described debt granted to Nigeria and other poor nations by Paris, London Clubs and other creditors as responsible for their underdevelopment. The world’s financial body said it’s now prepared to grant debt reliefs to these countries so that they can concentrate on dealing with the corona virus pandemic and other factors that stunt their growth.
“It’s not the best system for creditors to be making non-transparent loans into poor countries and this is going to improve the system,” said David Malpass, the World Bank president, at the ongoing April 2020 virtual Spring meeting of the Bank and International Monetary Fund (IMF).
Malpass also disclosed that China has also agreed to grant debt relief to Nigeria and other countries in the International Development Association, IDA.
The World Bank has described debt granted to Nigeria and other poor nations by Parish, London Clubs and other creditors as responsible for their underdevelopment, adding that the it’s now prepared to grant debt reliefs to these countries so that they can concentrate on dealing with the corona virus pandemic and other factors that stunt their growth.
“It’s not the best system for creditors to be making non-transparent loans into poor countries and this is going to improve the system,” said David Malpass, the World Bank president, at the ongoing April 2020 virtual Spring meeting of the Bank and International Monetary Fund (IMF).
Malpass also disclosed that China has also agreed to grant debt relief to Nigeria and other countries in the International Development Association, IDA.
The World Bank and the Exim Bank of China are Nigeria’s largest creditors with a combined portfolio of $11.46bn, according to data obtained from the Debt Management Office.
According to the DMO, Nigeria’s foreign debt stood at over $40 billion as at 2019.
The debt concession will begin from next month, the World Bank chief said.
He said “IDA countries will have bilateral debt relief beginning May 1. That way, they can concentrate their resources on fighting the pandemic and its economic and social consequences.
I take note that in the G-20 meetings, China is supporting the international agreement to allowing moratorium of debt repayments by IDA countries if they ask for forbearance.
That’s very important because China is one of the biggest creditors and their participation in that effort is important and was very welcome.”
According to him countries, such as Nigeria and Pakistan, are IDA-eligible based on per capita income levels and are also credit worthy for some IBRD borrowing.
They are referred to as ‘blend’ countries.
Malpass said the body will ensure that countries which receive debt relief are not allowed to mismanage such funds, that such should be used in providing life changing infrastructure.
He said “So if the government saves money by not paying creditors, there is an expectation that they use it for health, education, economic rebuilding, jobs and concrete ways to help the people of their country,” he said.
There is also within the debt relief initiative, the idea that there will be monitoring and assessment of the debt sustainability of poor countries.
Debt concession will be a win-win for creditors and debtors he said, adding “That process itself will amount to transparency.
That’s going to change the way that countries have been lending into the developing world and it will improve it substantially and there will be a big benefit even to the creditors.”
The debt concession will begin from next month, the World Bank chief said.
He said “IDA countries will have bilateral debt relief beginning May 1. That way, they can concentrate their resources on fighting the pandemic and its economic and social consequences.
I take note that in the G-20 meetings, China is supporting the international agreement to allowing moratorium of debt repayments by IDA countries if they ask for forbearance.
That’s very important because China is one of the biggest creditors and their participation in that effort is important and was very welcome.”
According to him countries, such as Nigeria and Pakistan, are IDA-eligible based on per capita income levels and are also credit worthy for some IBRD borrowing.
They are referred to as ‘blend’ countries.
Malpass said the body will ensure that countries which receive debt relief are not allowed to mismanage such funds, that such should be used in providing life changing infrastructure.
He said “So if the government saves money by not paying creditors, there is an expectation that they use it for health, education, economic rebuilding, jobs and concrete ways to help the people of their country,” he said.
There is also within the debt relief initiative, the idea that there will be monitoring and assessment of the debt sustainability of poor countries.
Debt concession will be a win-win for creditors and debtors he said, adding “That process itself will amount to transparency.
That’s going to change the way that countries have been lending into the developing world and it will improve it substantially and there will be a big benefit even to the creditors.”
