Nigeria talks debts with top bankers

World Bank's James Wolfensohn and IMF chief Horst Koehler

By Elizabeth Blunt

The heads of the World Bank and the IMF, who are making a joint visit to Africa, are holding talks in Abuja with the Nigerian Government.

Relations between Nigeria and the international financial institutions were extremely bad during the years of Sani Abacha's military dictatorship, and President Olusegun Obasanjo's government is still trying to sort out the financial mess left behind.

General Abacha and his government were guilty of every sin in the IMF and World Bank book - blatant corruption, uncontrolled expenditure and default on international loans.

The elected government still has not got to the bottom of the morass, but at least cordial relations have been restored with the major financial institutions.

The World Bank has resumed lending and the IMF has a standby arrangement in place.

Paris Club problem

The main problems that remain are with the so-called Paris Club of official creditors.

Obasanjo wants to clean up Nigeria

Both sides agree that Nigeria owes them a lot of money, but they are in dispute about the amount.

Nigeria says that some of the debts were fraudulently incurred and unfairly inflated by exorbitant rates of interest and penalty payments.

The World Bank supports Nigeria, at least in agreeing that there is a legitimate issue over some of the debts, although it says it does not want to see Nigeria excluded again from the international financial system.

Nigeria is far too an important an economy in Africa and central to the bank's own plans for African economic development.

Other issues likely to be raised at the talks in Abuja include the conditions for the IMF's current standby arrangement.

Fund officials say they are concerned about levels of government expenditure, which have been higher than expected, and they also want to discuss the issue of making savings out of oil revenues while the world price is high.

Mali talks

Earlier, the World Bank and IMF heads and the leaders of three of Africa's most influential countries - South Africa, Nigeria and Algeria - discussed what they call a Programme of African Renaissance.

They met in the Malian capital, Bamako at the end of two days of talks between the financiers and the leaders of 10 West and Central African countries to try to define a new approach to fighting poverty in Africa.

President Obasanjo said the discussions had gone very well.

The new programme looks at ways of enhancing co-operation between industrialised countries and international institutions in order to promote stability and investment in Africa.