1. 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)

2. Methodology: Theory-based StockFlowConditionality InputsUS$ 18 billion cancellation and US$ 12 billion payment Conditions for policy and governance OutputsReduction in debt stock Reduction in debt service Policy change OutcomesCreditworthiness FDI, private investment Government investment Investment, MDGs, etc. ImpactEconomic growth

3. Debt stock in US$ billion, by creditor

4. 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)

6. 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

7. External debt stock in US$ billion, actual and counterfactual

8. 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

9. 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

10. External debt sustainability ratios, actual and counterfactual, in % 20042009Threshold NPV debt/GDP402 NPV debt/Exports907150 NPV debt/Revenues11610250 Debt service/Exports8115 Debt service/Revenues13625 NPV debt/GDP3140 NPV debt/Exports98150 NPV debt/Revenues138250 Debt service/Exports915 Debt service/Revenues1325

11. Some poverty indicators 20032008 Poverty headcount (’04)52 Primary enrolment (’04 and ‘08)8189 Ratio girls to boys in primary education (’04 and ‘08)8185 Infant mortality10075 U5 mortality201157 Skilled birth attendance3639 Maternal mortality800545

12. 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

13. Growth rates, in %