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IMF sure to wear down Nigerian resistance, say analysts

Nigeria's recent withdrawal from programmes agreed with the IMF is likely to be a shortlived one, lament activists who point to the leverage the Fund has over the debt-laden country. Further indication that the Washington-based lender institution holds sway over the economic policies of poor African nations has come in the form of an IMF demand that Ghana raise consumer charges for essential public utilities so as to qualify for fresh funds.

by Emad Mekay


WASHINGTON: Nigeria's decision to withdraw from programmes agreed with the International Monetary Fund (IMF) is a brave move that will not last against pressure from the economic powerhouse, analysts here say.

Although the decision, taken in the week of 4 March, was initially hailed as a rare instance in which a developing nation's government has publicly confirmed the view of IMF critics, who say the Fund dictates economic policies to poorer nations, many observers say the body is still firmly in control.

"The IMF has a great degree of leverage over the Nigerian government and while the government may seriously believe it owes its first allegiance to its own people rather than to the IFIs (international financial institutions), there are definite limits to how far it can pull away from their influence," said Salih Booker, director of Africa Action, a Washington-based advocacy group.

Other activists, including some who have long campaigned for the Fund to take a hands-off approach towards poor African nations, agree that Nigeria is likely to back down.

"I think they (the Nigerians) will more than likely fold, or even walk away from this position if pressure is applied - which is why it's all the more important to mark the small victories as they happen," said Soren Ambrose of the 50 Years Is Enough Network.

Nigeria owes $30 billion to Western creditors and IFIs and needs IMF certification for consideration of debt relief, analysts note.

The Fund has rebuffed successive governments' attempts to secure major debt relief because Nigeria is an oil-exporting country. Creditors, including the IMF, acknowledge that the debt burden is a problem for the impoverished nation but argue that since debt servicing consumes only about 10% of its oil revenues, the government should look elsewhere for financing.

The Paris Club, an informal grouping of lending countries, relies on the IMF and the World Bank to certify the economic behaviour of indebted countries before it decides on debt relief.

Hard line

Analysts say that while claiming to be sympathetic to President Olusegun Obasanjo's pleas for relief, the IMF has taken a hard line, saying there is no hope of debt relief without a solid track record of establishing a free-market economy.

"The IMF's real agenda in African countries is to secure debt repayments, to open these economies to multinational corporations," Booker said.

Following the signing of a stand-by agreement with the Fund in August 2000, Nigeria received a debt-restructuring deal from the Paris Club and a $1 billion loan from the IMF. Both were contingent on economic restructuring.

Since then, slumping world oil prices and a global economic slowdown have added to the strain on Nigeria's budget and prospects for its 126 million people. Poverty has been cited as among the main reasons for ongoing ethnic and communal tension. Sixty-six percent of the country now live below the poverty line and the proportion is growing.

On 14 March, about 500 pensioners in Nigeria's southern Edo state staged a protest over unpaid benefits. The previous week, hundreds of employees in the commercial capital, Lagos, demonstrated for several hours over not getting paid. Retired soldiers and policemen have also long complained about not receiving their pensions.

The IMF says the economic troubles are related to the government failing to meet key targets. In a statement released after the Nigerian withdrawal decision, it said the level of government spending this year could well exceed state resources, thereby generating inflation and hurting the poor.

State officials retorted that it is fiscal austerity, the product of IMF-monitored programmes, which is to blame for domestic unrest and poverty.

The Fund has had a difficult relationship with other African nations, including Kenya and Zimbabwe. Nigeria's decision is seen as a culmination of those tense ties, according to analysts.

There is "a constant tension that African governments feel, being forced to be more answerable to the demands of external creditors than to the needs of their own people. In countries where IMF policies have measurably lowered standards of living and left countries even more dependent on foreign creditors, there is certainly a difficult relationship between governments and the IMF," said Booker.

African governments are now spending more to service external debts than on healthcare for their populations, many of which are facing an HIV/AIDS pandemic.

Ambrose said that other African countries should take heart from the Nigerian stance. "That opens the door a centimetre or two more to other governments standing up to the IMF."

The Fund reacted coolly to the controversy. An official told IPS that the IMF has decided to give Nigeria "a breather" as the government grapples with a citizenry angry at how it is handling the economy.

But Booker had a different view. "IMF officials are not making a big deal out of the decision because they know they have Nigeria under their thumb, whether the government likes it or not," he said. "With its massive burden of foreign debt, Nigeria cannot simply bow out of the game." (IPS)                        

From TWE No 276 (1-15 March 2002)

 

 

 


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