US embassy cable - 01ABUJA1526

UNCLAS ABUJA 001526 
 
SIPDIS 
 
 
SENSITIVE BUT UNCLASSIFIED 
E FOR WMCGLYNN 
EB/IFD/OMA FOR PREID 
STATE PLEASE PASS TO EX/IM FOR DSOMERVILLE, DSCHNEIDER 
AND ROBINSON 
 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, NI, PREL 
SUBJECT: NIGERIA: BILATERAL DEBT NEGOTIATIONS REMAIN 
   IN LIMBO 
 
 
REF: A. A) ABUJA 1375 
     B. B) ABUJA 1374 
     C. C) STATE 79460 
     D. D) CARRIG-MULLINAX 12JUN01 EMAIL 
     E. E) STATE 97771 
 
 
1.  (SBU) Director General of the Debt Management Office Mr. 
A.S. Arikawe told Economic Section Chief June 27 that he 
remains pessimistic on prospects for an early resolution of 
USG/GON differences regarding the bilateral debt rescheduling 
agreement required to implement the December 2000 Paris Club 
rescheduling. 
 
 
2.  (SBU) Arikawe reports that Nigeria continues its 
negotiations with several bilateral creditors, but that the 
GON's differences with the U.S. are the most substantive and 
those differences are growing.  In addition to the objections 
mentioned in Refs A and C, Arikawe cited the following as 
"among the major problems": 
 
 
(a)  The GON disagrees with the interest accrual method, 
asserting that 5 percent per annum compounded daily results 
in greater interest charges than 5 percent per annum 
compounded annually, thus the effective interest rate is not 
as agreed to originally. 
 
 
(b)  The GON would require a rate of 5 percent compounded 
annually, or, as an alternative, USG agreement to use a 
360-day basis year with monthly compounding. 
 
 
(c)  A clarification of and adjustment in the interest rate 
and charges for non-previously scheduled debt. 
 
 
3.  (SBU) According to Arikawe, the GON will convene a 
gathering of Nigerian debt experts the week of July 9 to 
give the Debt Management Office's proposals "a thorough 
scrub" before they are submitted for approval for 
presentation to the USG.  He now estimates the week of July 
16 as the earliest that we can expect to receive those 
written comments promised at the May 3 Washington meetings. 
 
 
4.  (SBU) Arikawe further reported that Nigeria's Finance 
Minister wrote June 27 to the Paris Club Chairman requesting 
a five-month extension from June 30 to November 30 (vice the 
3-month extension noted in para 6, Ref A) for concluding the 
bilaterals required to implement the December 2000 Paris Club 
rescheduling agreement. 
Jeter