Nigeria ratifies new IMF policy

Daily Trust (Abuja)
Oct 14, 2005

Nigeria Ratifies IMF Policy on Debt Relief

Daily Trust (Abuja)
NEWS
October 14, 2005
Posted to the web October 14, 2005

By Ahmed I. Shekarau

With the ratification of the Policy Support Instrument (PSI), a new reform policy of the International Monetary Fund (IMF), Nigeria has taken a major step to concretise the debt cancellation approved for it in principle.

Nigeria is the first country to ratify the PSI policy, which is said to be a new tool designed to "formalise a certain level of multilateral surveillance" in low income countries that do not want to use the Fund's resources but still require a "signal" of good policies by the IMF to gain access to donor resources.

The ratification of the PSI by Nigeria was ahead of the expected formalisation of its $18 billion debt waiver by members of the Paris Club at the French capital on Tuesday, October 18, 2005.

Daily Trust has reliably gathered that a strong delega-tion to be led by Finance Minister, Dr. Ngozi Okonjo-Iweala, will represent Nigeria at the Paris Club meeting scheduled to hold between Monday and Wednesday, October 17-19, 2005.

A report made available to Daily Trust in Abuja, which was excerpted from IMF documents, indicated that Nigeria ratified the Fund's reform policy on the 5th of this month, on the same day that the Board of the Monetary Fund approved the PSI.

According to the IMF documents, the PSI would "consist of a policy framework normally focused on consolidating macro-economic stability and debt sustainability while deepening structural reforms in key areas that constrain growth."

The ultimate goal of the policy, according to the documents, is to help countries, particularly developing nations that ratify it, to achieve their objectives of reducing poverty.

The documents disclosed further that ratifying the PSI will have the standard of "upper credit tranche conditionality," clearly signalling that the IMF's must endorse the members' policies.

This endorsement will be based on semi-annual reviews of countries' "good performance" in implementing the reform policy.

With this ratification it is expected that Nigeria's implementation of the reform policy will be closely monitored by the IMF.

A report on IFI News said that these aspects of the instrument (PSI) have led some non-governmental organisations such as the "Solidarity Africa Network in Action" and "50 Years is Enough" networks to comment that the PSI amounts to "a formal method of continuing to impose IMF conditions on countries, even if they are no longer officially indebted to the IMF or taking loans from it."

The groups have argued that it is no coincidence that the PSI emerged at exactly the same time as G8 debt cancellation plan.

While the 18 other poor nations that benefited from the G8 debt cancellation deal would now be solvent and may choose not to access IMF resources, the NGOs fear that the PSI will ensure that those countries, including Nigeria, continue to be closely monitored and follow the Fund's approved policy frameworks.

It is expected that the IMF Board of Directors will discuss and approve Nigeria's ratification of the two-year policy support instrument on Monday, ahead of the country's final negotiation for the major reduction of its foreign debt with members of the Paris Club on Tuesday. ments, the PSI would "consist of a policy framework normally focused on consolidating macro-economic stability and debt sustainability while deepening structural reforms in key areas that constrain growth."

The ultimate goal of the policy, according to the documents, is to help coun-tries, particularly developing nations that ratify it, to achieve their objectives of reducing poverty.

The documents disclosed further that ratifying the PSI will have the standard of "upper credit tranche conditionality," clearly signalling that the IMF must endorse the members' policies.

This endorsement will be based on semi-annual reviews of countries' "good performance" in implementing the reform policy.

With this ratification it is expected that Nigeria's implementation of the reform policy will be closely monitored by the IMF.

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