Presentation of Geske Dijkstra

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Results of the 2005 debt relief
agreement between the Paris Club
and Nigeria
An evaluation conducted by
ECORYS/OPM in 2010/11 for IOB
Presentation by Geske Dijkstra, team
leader (Erasmus University Rotterdam
and IOB)
Methodology: Theory-based
Stock
Inputs
Flow
US$ 18 billion cancellation and
US$ 12 billion payment
Conditionality
Conditions for
policy and
governance
Outputs
Reduction in debt
stock
Reduction in
debt
service
Policy change
Outcomes
Creditworthiness
FDI, private
investment
Government
investment
Investment,
MDGs, etc.
Impact
Economic growth
Debt stock in US$ billion, by creditor
35
30
25
20
multilateral
bilateral
private
15
10
5
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
0
The 2005 agreement with the
Paris Club
• 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)
Outputs:
Stock and flow effects
• 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
External debt stock in US$ billion,
actual and counterfactual
60
Counterfactual debt stock
50
Actual debt stock
40
Difference = stock effect
(output)
30
0
20
10
0
2002
2003
2004
2005
2006
2007
2008
2009
Conditionality effect
• 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
4. Outcomes
• 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
External debt sustainability ratios,
actual and counterfactual, in %
2004
2009
Threshold
NPV debt/GDP
40
2
40
NPV debt/Exports
90
7
150
NPV debt/Revenues
116
10
250
Debt service/Exports
8
1
15
Debt service/Revenues
13
6
25
NPV debt/GDP
31
40
NPV debt/Exports
98
150
NPV debt/Revenues
138
250
Debt service/Exports
9
15
Debt service/Revenues
13
25
Some poverty indicators
2003
2008
Poverty headcount (’04)
52
Primary enrolment (’04 and ‘08)
Ratio girls to boys in primary
education (’04 and ‘08)
81
89
81
85
Infant mortality
100
75
U5 mortality
201
157
36
39
800
545
Skilled birth attendance
Maternal mortality
5. Impact and conclusions
• 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
Growth rates, in %
30
GDP
25
GDP oil
20
Agriculture
15
10
5
0
-5
-10
-15
2002
2003
2004
2005
2006
2007
2008
2009
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