Nigerian Economy: Rising debt, IMF Once again, Collapsing Infrastructure as fat Cats get fatter

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In 2005, during the tenure of Obasanjo with Okonjo Iweala as Finance minister, Nigeria paid a whopping sum of 12 Billion dollars to buy back 18 Billion dollars debt owed Paris club. This prepared the ground for Nigeria to completely pay off its debt by April 2006 and made her first African country to fully pay off its debt (estimated at $30 billion) owed to the Paris Club. This “exit” from debt trap was celebrated both nationally and internationally; the celebration alone was estimated to gulp 2.4Billion Naira.

This further confirmed the subservience nature of Nigerian ruling elites to their foreign masters in the west. This 12Billion Dollars would have gone a long way in solving many infrastructural challenges, the health, education and power would have positively benefitted immensely from this windfall, but those become completely unimportant when the interest of Nigerian ruling class or their masters are involved. Despite the fact that, over 35Billion dollars already paid in interest and the destination of this debt cannot be rationally traced, yet it was still the priority of thieving gangsters to dole out such a huge amount, under a dubious buy back deal.

Something similar happened in Argentina on September 2, 2008; President Cristina Fernandez de Kirchner of Argentina announced plans to pay off the entirety of debt owed to the Paris Club, which amounted to roughly $6.7 billion. Political pressures ensued and though the government officially insisted on its intention to repay,[3] government officials eventually stated that this is unlikely until global credit conditions improve, in spite of the fact that Argentina is richer than Nigeria. Regime of Cristina Fernandez de Kirchner became so unpopular and even up till now it has not emerged from this infamous attempt; but in Nigeria, this mad wastage was greeted with drumming and dancing.

A naïve observer would have thought that for Nigerian ruling class to have rejoiced over exiting debt burden means never again will they enter it again. That they have forever learnt their lessions, but can an irresponsible, unproductive and useless ruling elites live without debt? In less than 5 years, the debt portfolio has climbed and surpassed the 2005 figures. Nigeria now owes $37Billion. The World Bank/IMF, just as it did in 2005, has once again stationed its representative in person of Okonjo Iweala; at least to oversee its interest and ensure that its policies are followed to the latter. Despite favourable oil price in the international market which means more money for Nigeria, the debt continues to rise uncontrollably. The main difference between now and 2005, is the composition of this debt figure. Just $5 Billion is foreign; the remaining is debt owed their local friends and contractors. The immediate response of Okonjo Iweala after her swearing in was that there is no cause for alarm; that the present debt is just 19% of GDP, which falls short of 40% boundary recommended by World Bank. From her response, it means we have just begun the part two into the jungle of unending debt. As at present, N542bn is earmarked for debt servicing in 2011 budget alone. This amount is more than the total allocation for education and health combined. Okonjo Iweala personally benefitted from the 2005 deal because her Consultancy outfit actually brokered the deal and the consultancy fee alone is enough to encourage her to do it over and over again.

The main thrust of IMF/WORLD BANK policy for Nigeria, like other less developed countries is to devalue the currency. Nigerian ruling class, a complete slave to foreign interest is always ready to carry through any policy irrespective of its own local narrow interest. With a devalued Naira, the local debt becomes cheaper and inflation becomes galloping. Devalued Naira will make foreign component of the debt to be more valued and at the same time cheapen the local component. There might be a determined resistance from local bourgeoisie against this move, but as always, in the final analysis, the interest of International capital prevails.

This revealed more glaringly why inflation presently at 12.5% will likely shot up the more. Why Goodluck Jonathan Government will continue to deceive the Nigerian workers as regards minimum wages; even if eventually paid, devaluation will make mess of it. This regime like previous regimes is only capable of bringing succour to foreign interest and local cronies and at the same time increase pain and agony for Nigerian masses. Nigerian ruling class is absolutely dependent on foreign interest, this was also revealed by wikileaks: how US Government mobilized support for Jonathan and sent their illustrious daughters(Okonjo Iweala) to directly oversee their collective interest.

As long as Nigerian ruling class remain in power, more agony and frustration will continue unabated for Nigerian masses, just as foreign capital and local bourgeoisies benefit more and more from our pains. The only available alternative to a better Nigeria is booting out this thieving ruling elites, establishing the Government of the working people; for working people and in the interest ordinary Nigerians.