Restucturing the debt of Nigeria

Paris Club creditors agreed on December 13, 2000 with the Government of the Federal Republic of Nigeria to a restructuring of its external debt. This agreement follows the International Monetary Fund's approval of a stand-by arrangement on August 4, 2000.

This agreement consolidates roughly US$ 23.4 billion. This amount consists mainly of US$ 21 billion in arrears as of August 1st, 2000 (of which US$ 0.3 billion are arrears on official development assistance loans). The rest of the consolidation deals with principal and interest falling due from August 1st, 2000 up to July 31, 2001 (US$ 2.4 billion of which US$ 40 million of ODA loans).

The rescheduling is structured on the so-called "Houston terms" : ODA credits are to be repaid over 20 years, with 10 years of grace, at interest rates at least as favourable as the concessional rates applying to those loans ; commercial credits are to be repaid over 18 years, with 3 years of grace, with progressive repayments, at market rates of interest. So as to ensure more equal payments among creditors, part of the consolidated amounts representing US$ 2.76 billion will be rescheduled over a period of 9 years beginning in 2001. In addition, part of the consolidated amounts consisting of US$ 0.62 billion of arrears and 2000 maturities on post-cut-off-date debt will be rescheduled over a period of 5 years beginning in 2001. Paris Club creditors agreed on an exceptional basis to capitalise the interest falling due on this rescheduling during the consolidation period (August 1st, 2000 - July 31, 2001).

As a result of this agreement, the debt service due by Nigeria to Paris Club creditors will be reduced to US$ 1 billion in 2001.

On a voluntary and bilateral basis, each creditor may also undertake debt for nature, debt for aid, debt for equity swaps or other debt swaps.

This debt restructuring is expected to make an important contribution to Nigeria's economic outlook and will satisfy Nigeria's financing requirements from August 1st, 2000 up to July 31, 2001. This debt rescheduling will enter into force on April 15, 2001, unless Nigeria's track-record with the International Monetary Fund and the Paris Club is not considered satisfactory.

In addition, looking forward to Nigeria's negotiation of a follow-on program with the IMF, and subject to satisfactory implementation of the current IMF program and Paris Club agreement, Paris Club creditors also agreed in principle to consider possible options in further restructuring of Nigeria's debt falling due after July 31, 2001 consistent with Nigeria's medium and long term capacity to repay. As is standard in Paris Club agreements, this possible future restructuring would include a comparability of treatment provision.