Coronavirus: NLC asks IMF, World Bank to grant Nigeria debt relief

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The Nigeria Labour Congress (NLC) has asked the International Monetary Fund (IMF) and the World Bank to grant Nigeria debt relief, debt moratorium and debt pardon to enable her to effectively battle the coronavirus infection in the country as well as overcome the impending economic problems created by the ongoing global pandemic.

In a press release signed by Congress President, Comrade Ayuba Wabba, on Tuesday, April 14, 2020, titled: “Nigeria Needs the IMF/World Bank Debt Relief, Debt Moratorium and Debt Pardon,” the NLC said IMF’s response to the coronavirus pandemic “in providing debt relief service to 25 poor countries could not have come at a better time.” It also welcomed last week’s announcement by the World Bank 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.

Comrade Wabba, who is also the President of the International Trade Union Confederation (IYUC), stated that though the NLC applauds the benevolence of the two Bretton Woods financial institutions, it is however unhappy with the exclusion of Nigeria as a beneficiary of the relief package.

“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,” the NLC stated.

Comrade Wabba pointed out that the signs of economic crisis are already visible in Nigeria in just two weeks of lockdown in the FCT, Lagos and Ogun states. “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,” he stated.

Comrade Wabba added that the NLC “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.”

Comrade Wabba stated that in order to mobilise the required financial resources to fight and defeat Covid-19, the Nigerian labour movement is advocating for a temporary freeze on debt repayments by underdeveloped economies, the 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 Wabba contended.

Flashback

The NLC, since its founding, has been in the forefront of the vanguard against the imposition and implementation of IMF and World Bank policies on Nigeria.

From the late ‘70s through the late ‘90s and up to the Presidency of President Olusegun Obasanjo, the NLC had vigorously fought against the imposition of neo-liberal policies it perceived as inspired by the IMF and World Bank.

Policies such as Structural Adjustment Programme (SAP), privatisation or outright auction of public assets, rationalisation of public service and deregulation of major sectors of the economy, particularly the downstream sector of the petroleum industry, among others formed the package of conditionality of IMF and World Bank for third world economies. The campaigns against these policies in addition to the fight for democratic governance had for decades been the basis of the struggle that the NLC had led the mass movement in Nigeria to resist being implemented.

Debt relief, cancellation or forgiveness

Officially, the IMF and the World Bank do not believe in debt cancellation or forgiveness. They however do often agree to what they technically refer to as debt relief, which they grant to Highly Indebted and Poor Countries” (HIPC) upon the fulfillment of agreed conditionality. Therefore, debt relief does not automatically translate to debt forgiveness or cancellation. In any case, the IMF and World Bank do not see Nigeria as highly indebted or poor even if there are very poor people in Nigeria.

The IMF and the world bank believe that “unconditional” debt “forgiveness” or “cancellation” could risk debt relief being mismanaged either through corruption or being spent on some white elephant projects that have little, if any, benefit in terms of sustainable growth or poverty reduction.”

Therefore, the principal aim of the HIPC initiative is to offer debt relief under a process that guarantees that the fund will be put to effective use to promote development or poverty reduction. While this looks okay on the surface, in practice, the process or “conditionality” designed to guarantee the fund, usually contrast with prevailing socio-economic realities, and always end up not only frustrating the country but also compounding the economy, and always invariably lead to “debt trap.

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