A Minister who served in former President Olusegun Obasanjo’s first term before becoming an adviser to the then president has rejected the distinction between domestic and foreign debt as a reason why a debt moratorium may not be an option on the table for Nigeria’s way forward, saying that his likes would support Acting President Yemi Osinbajo should he decide to push such an option. Reacting to the views of a Development Economist who was himself reacting to such a hint currently in some quarters as published in the Intervention, (See “Is Debt Moratorium on the Table in the Turbulence of Negotiating Buhari’s Absence?”, May 25th, 2017), the former minister said although it is necessary for people like him to keep quiet at times such as this, the issue of debt moratorium is too critical for him to keep quiet. He argued that he could still make his point incognito.
He said there is no way the commitment of as high as 66% of government revenue to debt servicing could be justified on the basis of that it is to domestic rather than to foreign debt and, therefore, leaving the country with just over 30% for a population of nearly 200 million. He said he was shocked to learn from Dr Obadiah Mailafiya on NTA’s ‘Good Morning Nigeria’ that the country was spending that much, saying that as a former Deputy-Governor of the Central Bank of Nigeria and an international civil servant, Dr. Mailafiya was a voice to take seriously on this matter. According to the former minister, the tragedy is that the debt issue is a black box for most Nigerians because “many of us are ignorant of what is inside the box”. The few who do are not all patriotic while the ordinary Nigerians do not know what is going on there at all. The elite are rarely better in his view, just as neither the civil servants nor the civil society actors, religious and community leaders, legislators and politicians understand or care about the content of the black box of Nigeria’s indebtedness. Yet, debt is, according to him, the most dangerous threat to Nigeria’s democracy.
In the initial reaction to the first report that a debt moratorium might be on the table as part of managing President Buhari’s absence and afterwards, the Development Economist had argued that Intervention had understood the debt to be foreign debt but that it is the domestic debt that is consuming the budget. He too does not support committing 66% of government revenue to debt servicing but says that moratorium is not a response to domestic debt. Rather, the government, he said, must pay its creditors as and when due or the country would risk liquidity collapse. He pointed out how complicated domestic debt had become because cross-border financing is central to it. Since cross-border financing is another name for transnational corporations and foreign banks, it makes domestic debt to become the safest means for imposing neoliberal conditionalities such as privatisation, devaluation, withdrawal of subsidies and jacking up interest rates.
The former Minister’s disagreement with this is the distinction between foreign and domestic debt, saying that all debts are negotiable. “If moratorium does not apply to domestic debts, what happens to failed states that?” queried the statesman who argues that insisting on that distinction would amount to willing the end but denying the means. That is, declaring that we should strive to develop but only to be denied the means and breathing space to do so.
Positing that Economics itself is not an exact science, the one-time minister stressed how, at current stage of Nigeria’s development, everything is a necessity and moratorium on debt servicing, domestic or foreign, is unobjectionable. Confessing that he is not an economist, he told Intervention it is crucial to find out how many other countries in Africa, Latin America and Asia commit the percentage of her revenue to debt servicing as Nigeria does now. For him, it is only after that information that the propriety or absurdity of Nigeria’s current debt servicing can be decided by the Acting president. “If it is absurd, certainly he will enjoy the support of majority of the people in taking a decision for moratorium”.
He warned against anybody doing anything to push Nigeria to the situation Greece experienced in 2015, describing Greece as a reminder “if we continue to ignore the needs of our people”. Referencing what Obasanjo said during the crisis in Egypt, he said we could wake up one day to meet real crisis from which no one would be immune in its impact.
Arguing further, the ex-minister said “our obligation to our creditors should not be more important than our obligation to our people because the way things are can be dangerous”. Making reference to Oxfam’s recent claim that the wealth of the five richest people in Nigeria could end extreme poverty, the ex-minister said it was evidence that there is no redistribution in Nigeria. He said when Nigeria exited from indebtedness under the Obasanjo regime, substantial part of the debt stock was cancelled out rightly. “So, why can’t we pay 30% in debt servicing and have up to 70% to take care of our people?” he queried.
The last may not have been heard on the plausibility of debt moratorium as a way out of current impasse in Nigeria.