Nigeria deserves to be granted debt pardon from the International Monetary Fund (IMF) and the World Bank, the Nigeria Labour Congress (NLC) has said.
The NLC President, Ayuba Wabba, expressed disappointment that Nigeria was excluded from the list of 25 developing economies in Africa and around the world named as beneficiaries from support from Catastrophe Containment and Relief Trust (CCRT) to help address the impact of the COVID-19 pandemic.
At its Executive Board meeting on April 13, 2020, the IMF announced the debt relief channeled through its revamped CCRT to help the countries address the impact of the COVID-19 pandemic.
Last week, the World Bank also announced plans to roll out $160 billion in emergency aid to countries impacted by the coronavirus, including $14 billion in debt repayments to governments owed by 76 poor countries.
“Never in living memory has the world faced a twin catastrophe of both health and economic proportions as now. The novel coronavirus disease (COVID-19) which has infected close to two million persons and amassed a death toll of over one hundred thousand precious lives worldwide has also ground the global economy to a halt.
“The result is that many countries are desperately in search of funds to cope with rising health emergencies, especially with regards to the supply of life-supporting medical equipment, wears, and drugs.
“Even rich countries in Europe and America are struggling to keep up with the supply of essential medical goods and services as COVID-19 bites harder. The response of the International Monetary Fund (IMF) in providing debt relief service to 25 poor countries could not have come at a better time,” Mr Wabba said.
While he said the NLC applauds the goodwill by the IMF and World Bank, the labour movement expressed displeasure that Nigeria was excluded from the list of benefitting countries announced by IMF.
Why Nigeria should get relief
“We call for the inclusion of Nigeria in the beneficiary list for the COVID-19 related debt relief and debt moratorium based on very cogent reasons.
“The fact that Nigeria’s debt servicing is about 5% of our 2020 federal budget and 75% of our external reserves signpost that our debt servicing pledges are impracticable and should be re-negotiated,” Mr Wabba noted.
“Again, as the most populous country in Africa and a major regional transportation hub, with very active citizens, Nigeria could be a major epicentre for future global waves of COVID-19 if adequate support was not extended to the country to fight and contain the coronavirus pandemic.
“With a burgeoning constituency of the poor, including the working-class poor, the danger staring Nigeria hard in the face is huge. Nigeria needs all the support it can get, including debt relief, moratorium, and pardon in order to enable the country tide over the waves of COVID-19 pandemic,” he said.
Other reasons the NLC President gave to support the group’s demand for debt relief for Nigeria included the dire economic crisis the country was facing following the recent significant plunge in the price of crude oil at the international market.
He said the resulting economic crisis has already led to the federal government downsizing the capital expenditure in the 2020 national budget.
Besides, he recalled that in December 2019, Nigeria’s external debt hit a 16 year high level of $27 billion, in addition to a debt servicing commitment of $1.5 billion.
The NLC President said labour completely aligned with the warning by the International Trade Union Confederation (ITUC) and other international non-governmental organisations that the failure to address the debt and financing needs of developing countries could trigger large scale loss of lives and livelihoods.
To mobilise the necessary financial resources to fight and defeat COVID-19, Mr Wabba called for a temporary suspension of debt payments by developing economies, re-negotiation of such debt obligations, and ultimately debt pardon by creditor countries.
On Monday, the Board of the IMF granted debt relief to Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, D.R., The Gambia, Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo and Yemen.
In announcing the relief, the IMF Managing Director, Kristalina Georgieva, said the debt service relief was for member countries under the Fund’s revamped CCRT as part of the Fund’s response to help address the impact of the COVID-19 pandemic.
Ms Georgieva said the IMF provided the grants to its poorest and most vulnerable members to cover their IMF debt obligations for an initial phase over the next six months.
“The CCRT can currently provide about $500 million in grant-based debt service relief, including the recent $185 million pledge by the UK and $100 million provided by Japan as immediately available resources,” the IMF MD said.