In October 2020, the federal government refused debt relief overtures from the IMF.
The Minister of Finance, Budget and National Planning, Mrs Zainab S. Usman had announced the FG’s decision to reject the debt relief at the public presentation of 2021 FGN Budget Proposal- breakdown & highlights held in Abuja.
In April, the World Bank’s Development Committee and the G20 Finance Ministers endorsed the Debt Service Suspension Initiative (DSSI) in response to a call by the World Bank and the IMF to grant debt-service suspension to the poorest countries to help them manage the severe impact of the COVID-19 pandemic.
But the federal government said the risks of debt relief now far outweigh the potential benefits. “No, we are not taking the World Bank debt relief offer”, the minister declared when asked.
“The reason being, we have assessed the offer and we have reviewed the loan agreements that we have committed to between us and other countries. We have also had to review our agreements with the commercial lenders such as private parties that buy our Eurobonds. Right now we are being limited in being able to access the debt relief.
“The risks are high and taking the offer might trigger the incident of default by some of our lenders. We will try to play safe and not take it. The good news for Nigeria is that the component of debt service obligation that we have under the bilateral agreement is actually very small and it is something we can contain and manage. But if the next version comes up, and these limitations are taken into account, just like some of our peers who also could not take the debt relief because of the same limitations, then we will consider it at that time and see the terms and conditions and what the risks are to our country,” Mrs Ahmed had said.