OCTOBER 20TH IN HISTORY

October 20, 1967

On this day, the Federal Commissioner for Finance, Chief Obafemi Awolowo, said that Nigeria’s diplomatic missions abroad cost the nation some 2.5 million pounds annually to run. He said that government considered that amount too large and had therefore set up a special committee to look into “the advisability of reducing the number of the foreign missions.”

Speaking at a news conference called by him on this day to explain the new financial measures introduced by government, Chief Awolowo said that some of those missions were mere “listening posts.” They would have to be shut, as part of government’s emergency measures aimed at conserving foreign exchange.

Chief Awolowo had, two days earlier, told the nation in a broadcast that, “These missions cost us a fortune in foreign exchange and there is no doubt that some of them are maintained for prestige purposes only.” He said there was really no need for alarm then on the position of Nigeria’s foreign exchange reserve. It stood at just over 54 million pounds and that was still more than the statutory level. But he warned again about complacency and said unless the new government measures succeeded the country might be in danger.

On the internal side, he said government was also anxious to save on expenditure. Apart from restrictions imposed then on government ministries and corporations, every Nigerian salary or wage earner was being asked to undertake compulsory savings and maintain economy.

The income tax measures, for example, were spread round fairly on both the upper and lower income groups but with slight emphasis on the former.

“If we must really keep Nigeria one, and harmoniously so we must wipe out the disparity in the fields of education and social status.”

OCTOBER 20, 2005

On this day, the Paris Club announced an agreement to cancel 60% (about $18 billion) of Nigeria’s foreign debt.

The representatives of the Paris Club creditor countries met on October 18, 19 and 20, 2005 and agreed with the representatives of the Federal Republic of Nigeria on a comprehensive treatment of its debt. This agreement implemented the debt treatment framework for Nigeria announced by the Paris Club on 29 June 2005.

The representatives of the Paris Club creditor countries welcomed the ambitious economic program implemented by the Nigerian authorities since 2003 and their desire to secure an exit treatment from the Paris Club.

This agreement took place after the approval by the Executive Board of the International Monetary Fund of the Policy Support Instrument (PSI) on October 17, 2005 and included a debt reduction under Naples terms on eligible debts and a buy back at a market-related discount on the remaining eligible debts after reduction.

This agreement would be implemented in two phases in consonance with the implementation of the PSI:

In the first phase, Nigeria undertook to pay arrears due on all categories of debts and Paris Club creditors granted a 33% cancellation of eligible debts;

in the second phase, after the approval of the first review of the PSI by the Executive Board of the IMF, planned for March 2006, the Nigerian Government would pay amounts due under post-cutoff date debt, Paris Club creditors would grant a further tranche of cancellation of 34% on eligible debts, and Nigeria would buy back the remaining eligible debts.

In total, this agreement allowed Nigeria to obtain a debt cancellation estimated at US$ 18 billion (including moratorium interest) representing an overall cancellation of about 60% of its debt to the Paris Club of around US$ 30 billion. Paris Club creditors would be paid an amount of US$ 12.4 billion, representing regularization of arrears of US$ 6.3 billion, plus a balance of US$ 6.1 billion to complete the exit strategy.

This exceptional treatment of Nigeria’s debt offered a fair, sustainable, and definitive solution to Nigeria and Paris Club creditors. With the large debt relief included in this agreement, Paris Club creditors extended their strong support to Nigeria’s economic development policy and its fight against poverty.

The members of the Paris Club which participated in the reorganization of Nigeria’s debt were representatives of the governments of Austria, Belgium, Brazil, Denmark, Finland, France, Germany, Italy, Japan, the Netherlands, the Russian Federation, Spain, Switzerland, the United Kingdom and the United States of America.

Observers at the meeting were representatives of the governments of Australia, Canada and Norway as well as the International Monetary Fund, the World Bank, the African Development Bank, the European Commission, the Organization for Economic Cooperation and Development and the Secretariat of the U.N.C.T.A.D.

The delegation of the Federal Republic of Nigeria was headed by Dr (Mrs) Ngozi Okonjo-Iweala, Minister of Finance. The meeting was chaired by Mr. Xavier Musca, Director General of the Treasury and Economic Policy Department of the Ministry of Economy, Finance and Industry, Chairman of the Paris Club.