Nigeria, other countries to benefit from $14b debt relief

From NDUKA CHIEJINA, Abuja

Nigeria and 35 other countries are set to benefit from $14 billion G20 debt relief package.

The relief is coming under the Debt Service Suspension Initiative (DSSI), which has received 36 applications in the first month of implementation.

It was gathered from a G20 document that the debt relief “initiative could provide around $14 billion in immediate and critical liquidity relief by official bilateral creditors alone for the poorest nations in 2020”.

The G20 held an extraordinary meeting last week in Saudi Arabia under the International Financial Architecture Working Group “to discuss and assess the applications for suspension of debt service payments”.

The purpose of the extraordinary virtual meeting was “to have a proactive, collective assessment of the first weeks of implementation of the DSSI and further discuss any outstanding concerns”.

Saudi G20 Presidency Policy Lead of the International Financial Architecture Working Group, Bandr Alhomaly, stated: “Debt Service Suspension Initiative is a hallmark achievement in the G20’s history.”

According to him, “in its first month of implementation, 36 countries have requested to benefit from this initiative. As more requests come in, initial estimates by the World Bank indicate that immediate liquidity relief could be around USD 14 billion’’.

This, he noted, “would help vulnerable countries strengthen their fight against the pandemic. This amount could increase significantly if additional creditors, including multilateral development banks and private sector creditors, join the initiative.”

At the meeting were Working Group members, experts from International Monetary Fund (IMF), World Bank Group (WBG), Institute of International Finance (IIF), Paris Club Secretariat, and various Regional Development Banks. In addition, all bilateral official creditors are participating in the DSSI.

The G20 nations “agreed to a time-bound suspension of debt service payments for poorest countries on April 15, 2020, to ensure those nations are supported in full capacity to fight the COVID-19 pandemic and alleviate their economic pressure’’.

Nigeria was among 76 countries that was granted debt relief by G20 countries at the end of their meeting in Saudi Arabia on April 15th, 2020.

The G20 is a group of countries and Multilateral institutions like the World Bank. Nigeria has some IDA loans with World Bank and also some bilateral loans from China.

Nigeria will benefit to the extent that the principal and interest repayments falling due will be suspended under the debt service suspension initiative (not forgiveness) until end of 2020.”

The benefit for Nigeria will be the fiscal space created through debt rescheduling and interest payments which the country is obligated to countries like China and also the World Bank. (The Nation)