Results of the 2005 debt relief agreement between the paris club and nigeria
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An evaluation conducted by ECORYS/OPM in 2010/11 for IOB Presentation by Geske Dijkstra, team leader (Erasmus University Rotterdam and IOB). Results of the 2005 debt relief agreement between the Paris Club and Nigeria. Methodology: Theory-based. Debt stock in US$ billion, by creditor.

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Results of the 2005 debt relief agreement between the Paris Club and Nigeria

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An evaluation conducted by ECORYS/OPM in 2010/11 for IOB

Presentation by Geske Dijkstra, team leader (Erasmus University Rotterdam and IOB)

Results of the 2005 debt relief agreement between the Paris Club and Nigeria


Methodology: Theory-based


Debt stock in US$ billion, by creditor


1999: President Obasanjo; promise UK, US..

Second term Obasanjo 2003: policy changes

The 2005 agreement:

Nigeria paid arrears plus buyback, US$ 12 billion

Paris Club cancelled US$ 18 billion, in 2 phases

Conditions:

IMF Policy Support Instrument (PSI)

Virtual Poverty Fund (VPF)

The 2005 agreement with the Paris Club


Most likely counterfactual: US$ 1 billion paid out of US$ 3 billion due (2005)

→ flow effect still negative by end 2009, positive only by 2016

→ stock effect positive

Outputs:Stock and flow effects


External debt stock in US$ billion, actual and counterfactual


Very effective before 2005

Debt management

Macro-economic policies

Anti-corruption policies

Improved poverty reduction policies

To some extent also after 2005

PSI with strict fiscal and monetary targets

Virtual Poverty Fund was established

Money: US$ 750 million annually, 75% spent

Institutional effect: planning, implementation, M&E

Conditionality effect


Debt sustainability

External debt very sustainable

Domestic debt increased

Macroeconomic stability

Lower inflation

Cushioning 2009 crisis

Creditworthiness, higher FDI

Poverty reduction

Improvement in some indicators

4. Outcomes


External debt sustainability ratios, actual and counterfactual, in %


Some poverty indicators


Positive outcomes→ debt relief had some impact on economic growth

Indirect effect on income poverty reduction

Via high agricultural growth

Sustainability?

Better result than in other studies:

Stock fully eliminated

Pre-conditions effective

5. Impact and conclusions


Growth rates, in %


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