Nigeria could save $107.5 million under debt relief initiative, World Bank says

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    Nigeria, Africa’s biggest economy eligible for debt relief, could have saved $107.5 million under the initiative, according to the World Bank.

    Nearly half of Nigeria’s outstanding external debt is with multilateral lenders. The World Bank Group is its top creditor with $10.1 billion in loans. Beijing-based Export-Import Bank of China is the second largest single creditor with loans totaling $3.2 billion, while Eurobonds account for $10.86 billion or 39% of external debt, according to the debt management office.

    The threat of credit downgrades has kept many countries from seeking an eight-month suspension of $12 billion in debt payments offered by the Group of 20 leading economies to help the world’s poorest countries

    Nigeria and 72 other low-income countries of the world could save about $12.17 billion owed sovereign and other creditors this year through their participation in the World Bank and G20’s COVID-19 Debt Service Suspension Initiative (DSSI), according to fresh estimates published in a new database from the bank.

    Specifically, the World Bank’s data shows that Nigeria, which is among several eligible DSSI countries that have not yet applied to participate in the scheme, potentially stands to save $107.5 million if it becomes a participant.

    Under the DSSI, which is backed by the G-20, the World Bank, the International Monetary Fund (IMF) and the Paris Club of sovereign lenders, savings for participating countries will be short-term, since the initiative only provides for suspension of debt payments through the end of the year.

    It postpones those pay Malpass said: “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. 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.”

    New Telegraph’s analysis of the latest DSSI database, released by the World Bank on Friday, indicates that Angola is likely to be the largest saver among eligible DSSI countries with savings of $3.37 billion.

    Angola is followed by Pakistan and Kenya with projected savings of $2.4 billion and $802 million respectively.

    Further review of the data shows that Ghana, which like Nigeria is yet to apply for participation in the initiative, will have savings of $368.8 million, while Ivory Coast, which requested participation in the DSSI last week, will save $231.3 million through it, according to the World Bank’s projections.

    The World Bank has suggested that some countries eligible for participating in the DSSI have not requested to be part of the scheme because they are uncertain of how it will affect them.

    The bank said: “In some countries, the authorities see modest benefits of DSSI owing to the composition of their debt (they have no or limited exposure to official bilateral creditors). Some countries have indicated concerns that application for DSSI participation might send a negative signal about their creditworthiness.”

    In its macroeconomic report released last month, the Institute of International Finance (IIF) disclosed that DSSI-eligible countries owe nearly $13 billion in debt service payments to external private creditors for May 1st to end-2020.

    According to the IIF, upcoming debt service payments for Nigeria, Ghana, Angola and Honduras this year exceed $500 million. It pointed out that this highlighted the need for continued market access to help manage such payments.

    The Institute further stated in the report that the World Bank’s annual International Debt Statistics (IDS) suggests that private creditors probably hold around 20 per cent of the $500 billion of the 73 DSSI countries’ outstanding long-term public external debt stock.

    Noting that 26 out of 73 eligible countries have outstanding Eurobonds totalling $70 billion, up from $20 billion in 2015, the IIF said that the total stock of DSSI Eurobonds amounts to some $70 billion and that Nigeria, Ghana, Angola, Côte d’Ivoire, Kenya and Pakistan account for over 70 per cent of the total market.

    The Institute explained that the countries in this category are those with weak healthcare systems and underdeveloped domestic capital markets.

    The United Nations, many African countries and civil society groups, have called for debt relief for poor countries to be extended for two years to allow them recover more fully from the economic shock of the pandemic.

    Indeed, the Jubilee Debt Campaign, a coalition of national organisations and local groups around the UK, has estimated that the cancellation of poor countries’ debt payments, including to private creditors, would free over $25 billion for the countries this year, or $50 billion if extended through 2021.

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