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Nigeria pays off last of discounted debt to Paris Club

Nigeria said on Friday that it had paid the last of its US$30 billion debt to the Paris Club of creditor nations.

"Nigeria will not owe anybody in the Paris Club one kobo," Nigerian President Olusegun Obasanjo said in a statement earlier this week, referring to a Nigerian unit of currency much like the penny.

Nigeria reached a deal last October with the Paris Club, which includes the US, Germany, France and other wealthy nations, that allowed it to pay off about US$30 billion in accumulated debt for about US$12 billion, an overall discount of about 60 percent.

The government said that it paid a final installment of US$4.5 billion on Friday, Reuters reported. It plans to use the money it saves to develop the country and reduce poverty.

Nigeria committed to using foreign reserves, salted away as oil prices soared, to cancel its debt, which had been racked up during decades of military rule.

The repayment is the latest sign that Nigeria's economy, long hobbled by corruption and dominated by a single product -- oil -- is on the rebound. The banking sector, which was crowded with small banks of questionable reliability, was recently consolidated to form about two dozen banks with stronger capitalization.

Earlier this year, two credit-rating agencies rated Nigeria's credit as BB-minus, which is below investment grade but puts it on a par with developing nations like Turkey, Ukraine, and Brazil.

Debt relief has become a central issue in the fight against poverty. Nigeria, which owed about US$36 billion in overall debt, is one of the most indebted nations in the world. With a population of about 130 million, it has more impoverished citizens than any other African nation; per capita gross domestic product stands at roughly US$1,000 a year.

Yet Nigeria had not been among the nations that have received write-offs or discounts on their debts, as several poor countries have. In part, that is because of its reputation for corruption, earned by a succession of military governments that plundered the state treasury, and because Nigeria, with its oil wealth, is seen as being able to pay.

Groups that have campaigned for debt cancellation said that the debt Nigeria owed was accumulated under military rulers, and that the current Nigerian government, which was democratically elected and has made fighting corruption a priority, should not be forced to pay. But Nigeria's debt was largely accumulated under civilian governments, and left unpaid by military rulers.

Nigeria's vast oil reserves make it one of the world's largest oil producers. Recent political violence in the Niger Delta, an oil-rich region where militants are fighting for greater autonomy, has reduced output by 20 percent.
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