Nigeria is yet to approach the World Bank for debt restructuring, its President, David Malpass, said.
Debt restructuring is a process that allows Nigeria, facing cash flow problems and financial distress, to reduce and renegotiate its delinquent debts to improve or restore liquidity so that it can continue its operations.
The World Bank President made this statement soon after Zainab Ahmed, Minister of Finance, Budget, and National Planning, backtracked and indicated that Nigeria was considering all of its options, including how to buy back some of its debts, rather than seeking a debt restructuring.
The total debt owed to the World Bank Group by Nigeria rose by $660m in the first six months of 2022, according to the Debt Management Office and the financial statements of the World Bank.
Ahmed said: “We have been engaging financial institutions to look at the opportunity to restructure our debt to further stretch the debt service period to give us more fiscal relief. Those are some of the things we want to achieve in this meeting.”
In response, Malpass said: “With regard to debt restructuring, the World Bank works very closely with the IMF on debt situations, Nigeria has not asked for the Common Framework under the G20 process.”
That process has been slow in Chad, Ethiopia, and Zambia, and there are some signs of movement in Zambia, but it’s still challenging.
“So, Nigeria and Ghana, both did not ask for a common framework treatment. Kristalina Georgieva (IMF Managing Director) and I were talking yesterday with the group about if countries could have a situation where the common framework is paused or allowed the country to have a standstill on their debt.“
That would help the countries choose their path forward on debt restructuring and that would mean they would get a break on debt payments while they’re working out a restructuring agreement with the world. But Nigeria didn’t go, it hasn’t gone that route.”