NIGERIA NEEDS THE IMF/WORLD BANK DEBT RELIEF, DEBT MORATORIUM AND DEBT PARDON
Never in living memory has the world faced a twin catastrophe of both health and economic proportions as now. The novel corona virus 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. At its Executive Board Meeting held on April 13, 2020, the IMF announced that the gesture channeled through its revamped Catastrophe Containment and Relief Trust (CCRT) is targeted at addressing the impact of the Covid-19 pandemic. Last week, the World Bank also announced plans to roll out US$160 billion in emergency aid to countries impacted by the Corona virus including US$14 billion in debt repayments to governments owed by 76 poor countries.
While the Nigeria Labour Congress applauds the goodwill by the IMF and World Bank, we wish to express our displeasure that Nigeria was excluded from the list of benefitting countries announced by IMF. 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.
First, Nigeria is facing a dire economic crisis given the recent plunge in the price of crude oil, Nigeria’s major foreign exchange earner. This has already led to the downsizing of the capital expenditure in the 2020 national budget. Second, in December 2019, Nigeria’s external debt hit a 16 year high of US$27 billion with a debt servicing commitment of US$1.5 billion. 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.
Third, Nigeria is the most populous country in Africa and is a major regional transportation hub. The implication is that a population as large as Nigeria’s with very active citizens could be a major epicenter for future global waves of Covid-19 if very robust and adequate support is not extended to Nigeria to fight and contain the corona virus pandemic.
Already, the dire signs are all over the place. During the two weeks initial lockdown in Lagos State, Ogun State and the Federal Capital Territory (FCT), there were reports of increased tension, unrests and criminal activities in different parts of the country. The fact is that the dangers of a burgeoning constituency of the poor including the working-class poor is staring us hard in the face. We do not know how long this dam can hold. But we do know that 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.
The Nigeria Labour Congress completely aligns with the position of the International Trade Union Confederation (ITUC) and other international non-governmental organizations which warned that failure to address the debt and financing needs of developing countries could trigger large scale loss of lives and livelihoods. This could be the harbinger of the collapse of the global social and economic order.
In order to mobilize the necessary financial resources to fight and defeat Covid-19, the Nigerian labour movement calls for a temporary suspension of debt payments by developing economies, re-negotiation of debt obligations, and ultimately debt pardon by creditor countries.
We also believe that the current difficulties instruct our government to always keep a healthy debt profile that can withstand the evil day. While we learn our lessons, we must halt Covid-19, we must re-start our economy, we must pay for essential goods and services, we must recover jobs and income, we must save lives, and we must live again.
Comrade Ayuba Wabba, mni
President, Nigeria Labour Congress
14th April, 2020