IMF, World Bank Call For Suspending Debt Payments By Poorest Nations

 

The International Monetary Fund and World Bank on Wednesday called for governments to put a hold on debt payments from the world’s poorest nations so they can battle the coronavirus pandemic.

“The World Bank Group and the IMF believe it is imperative at this moment to provide a global sense of relief for developing countries as well as a strong signal to financial markets,” the Washington-based development lenders said in a joint statement.

The move aims to help countries that are home to two-thirds of the world’s population living in extreme poverty — largely in sub-Saharan Africa — and qualify for the most generous, low-cost loans from the International Development Association (IDA) financed by wealthier nations.

“The coronavirus outbreak is likely to have severe economic and social consequences for IDA countries” which will face “immediate liquidity needs to tackle challenges posed by the coronavirus outbreak,” the organization said.

The IMF and World Bank called on the Group of 20 nations to support the initiative for “all official bilateral creditors to suspend debt payments from IDA countries that request forbearance.”

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In addition, the institutions called for an analysis of the financing needs these countries will face, and whether their total debt load is sustainable.

Part of the World Bank, the IDA is one of the largest sources of assistance for the world’s 76 poorest countries, providing zero or low interest loans spread over 30 years or more, and grants to some distressed nations.

In the fiscal year ending June 30, 2019, IDA commitments totaled $22 billion, of which 36 percent was provided on grant terms, according to the World Bank.

AFP

Nigeria Has Not Applied For Emergency Loans, Says Finance Minister

LoansThe Minister of Finance, Mrs Kemi Adeosun, has refuted a report suggesting that Nigeria has applied for emergency loans from World Bank and African Development Bank (AFDB).

A statement made available by her Special Adviser on Media Matters, Mr Festus Akanbi, revealed that Nigeria did not apply for any emergency loan.

The statement quoted the Minister as saying “the truth is that Nigeria, as part of the plans to fund the 2016 budget currently undergoing the approval process of the National Assembly, has indicated an intention to borrow N1.8trillion principally for investment in capital projects to stimulate the economy”.

The Finance Minister said that the option of the World Bank is to ensure an optimum financing structure, noting that the 2016 budget is part of the medium-term economic framework of the Federal Government, which the World Bank is aware of.

According to her, the proposed budget deficit will be funded equally through external and domestic sources.

Nigeria is exploring the options of multilateral agencies like the World Bank and AFDB and export credit agencies such as China Exim Bank due to their concessionary interest rates.

Mrs Adeosun said that the need to invest in infrastructure to stimulate the economy and the long-term payback period of capital projects demands that lowest cost of fund be obtained.

“Nigeria, as a member of World Bank Group is entitled to access available funds like every member-country,” she said.

World Bank On Poverty: Finance Minister Attributes Nigeria’s Rating To Population

Okonjo-Iweala on WBNigeria’s Minister of Finance, Dr. Ngozi Okonjo-Iweala, has been explaining how the World Bank arrived at its rating of Nigeria among the extreme poor nations of the world.

Fielding questions from journalists at a forum in Abuja, Dr. Okonjo-Iweala explained that the rating was based on the large number of poor people living in the country, a phenomenon she said was peculiar to middle income countries, including Nigeria.

“India is a middle income country, one of the largest in the world, like Nigeria, is a big economy but the largest number of poor people in the world resides in India and China and other places.

“Most middle income countries, even Brazil have large numbers of poor people. That is the reality of today, Nigeria is no exception”, she said.

She explained further, “Today, if you go to the Chinese, they will tell you ‘let us slow down about praising China’ because we still have a substantial number of poor people; Brazil the same, that is why they started the safety net programme in Brazil and that is what President Goodluck Ebele Jonathan has asked four or five of his ministers to get together and try to build this platform.

“So we should not try to single Nigeria out. What we have to do is focus on what is the answer, what are other countries doing that we can also learn from and do. Nobody says that everything is fine but we are learning and where we make some progress like other countries, we should also acknowledge it.”

Other countries also rated by the World Bank group as extremely poor are India, China, Bangladesh, Democratic Republic of Congo, Indonesia, Pakistan, Tanzania, Ethiopia and Kenya.

World Bank Rates Nigeria Among Extremely Poor Countries

World-BankThe World Bank Group has rated Nigeria among the world’s extremely poor countries, promising to assist in ending what it called ‘extreme poverty’ in the nations.

Other countries that were also rated as extremely poor are India, China, Bangladesh, DR Congo, Indonesia, Pakistan, Tanzania, Ethiopia and Kenya.

At the Council on Foreign Relations (CFR) in Washington on Wednesday, in advance of the World Bank/IMF Spring Meetings, World Bank President, Dr Jim Yong Kim, stated that the global bank would deal with the extreme poverty in Nigeria and its counterparts in the coming years.

Ending Extreme Poverty By 2030

He said: “The fact is that two-thirds of the world’s extreme poor are concentrated in just five countries: India, China, Nigeria, Bangladesh, and the Democratic Republic of Congo.  If you add another five countries, Indonesia, Pakistan, Tanzania, Ethiopia, and Kenya, the total grows to 80 per cent of the extreme poor.”

Dr Kim stressed that the World Bank Group would focus on Nigeria and other nine countries, but emphasised that the plan would not make other countries in the world to be ignored.

“We will have a strategy that ensures that no country is left behind, as we move toward the target of ending extreme poverty by 2030,″ he said.

The World Bank President also announced a series of measures aimed at strengthening the World Bank Group to better meet the evolving needs of clients, including a $100 billion increase in the lending capacity of the Bank’s lending arm for middle-income countries over the next decade.

According to Dr. Kim, this new innovations in financial management, and a boost in the institution’s ability to provide private sector support follows the record $52 billion replenishment of IDA, the World Bank’s fund for the poorest, in December 2013.

Kim also outlined how the Bank was positioning itself to better achieve its goals of ending extreme poverty by 2030 and boosting shared prosperity for the lowest 40 per cent in developing countries.

“We now have the capacity to nearly double our annual lending to middle-income countries from $15 billion to $26 to $28 billion a year. This means that the World Bank’s lending capacity will increase by $100 billion to roughly $300 billion over the next ten years.

“This is in addition to the largest IDA replenishment in history, with $52 billion in grants and concessional loans to support the poorest countries,” he said.

 

Nigeria’s debt is now N6.88 trillion…. DMO

The total debt profile of Nigeria now stands at $44.28bn (N6.88tn), according to the Debt Management Office (DMO).

Statistics obtained from the DMO revealed that the domestic debt component of the total indebtedness stood at $38.37bn (N5.97tn), while the external debt stood at $5.91bn (N919.44bn) as at March 31, 2012.

Details of the external debt balance showed that multilateral financial institutions accounted for 83.28 per cent of the country’s total debt with the International Bank for Reconstruction and Development-a member of the World Bank Group-is owed $6.31m.

Another member of the group, the International Development Association is owed $4.29bn while the International Fund for Agricultural Development is owed $70.25m.

The African Development Bank is owed $43.55m, while the African Development Fund is owed $387.23m.

Non-Paris Club debt sources account for 8.26 per cent of the nation’s external debt, which includes European Development Fund, $110.08m; and the Islamic Development Fund, $14.56m.

Bilateral loans account for $433.84m, while commercial loans contribute $54.63m.

The $500m, which Nigeria borrowed from the International Capital Market in 2011, accounts for the remaining 8.26 per cent of the external debt.

Details of the domestic debts, on the other hand, showed that FGN bonds accounted for N3.67tn or 61.44 per cent of the money borrowed by the Federal Government from internal sources.

Nigerian Treasury Bills account for N1.95tn or 32.63 per cent, while treasury bonds account for N353.73m or 5.93 per cent.

As at March 31, 2011, the nation’s external debt stood at $5.23bn, while the domestic debt stood at N4.87tn.

This means that within a one-year period, the external debt stock rose by 13 per cent, while the domestic debt stock rose by 22.59 per cent.

The Federal Government had recently disclosed to the National Assembly its plan to borrow $8bn from external sources for infrastructure development.

If the loan request is approved, the country’s foreign debt will grow to $13.91bn.