THE NIGERIEN DEBT PROFILE *

1. Niger is one of the poorest countries in the world, belonging to the Less Developed Countries' category (LDCs) and placed among the last ranked countries regarding the Human Development Indices published in the Annual UNDP Report. Compared to its GDP and exportation levels, this country has a very important external official debt which makes it eligible to the Bretton Woods Institutions' Initiative in favour of the so called "Heavily Indebted Poor Countries (HIPC). The last available figures indicated at the end of 1998 a Nigerien debt volume of 859.1 billion of FCFA for a GDP of 992.5 billions ie 86.5% and a debt service of 50.3 billion of FCFA for an exportation volume of 121.6 billions ie 41.4%.
2. While the Nigerien situation needs more external mobilization resources, the debt service consumes more than a third of state resources, regardless of arrears which are growing every year. This constitutes a very heavy constraint which impedes all economic growth and social development efforts. Structural Adjustment Programmes as well as initiatives which aim at debt alleviation, especially when followed-up by an Enhanced Structural Adjustment Facility's framework (ESAF) have definitely not resolved the debt situation in indebted poor countries. SAP and ESAF have been imposed by creditors to make sure that HIPC Beneficiary Governments accept firm commitments consisting of pursuing strong programme of adjustment and social reforms, undertaking consequent debt management efforts including no external arrears aggravation. In other terms commitments will lead to limit external resource mobilization only to donations or quasi donations.
3. Niger's debt burden burgeoned tremendously since the beginning of the 1980s, mainly generated by the sudden and crucial fall of Uranium exportation prices. During that period the debt stock increased considerably, deteriorating the debt burden ratios. The debt stock increased from 182.3 billion of FCFA in 1980 to 859.1 billions in 1998. The Nigerien debt is mainly public, multilateral and with favorable conditions. The multilateral debt which could not be rescheduled till date, constitutes two third of the global volume and more than 50% of its service. Thanks to the closing of the access to the financial market, Niger can be considered as free of commercial and private debt. The private and commercial debt contracted during the 70s and 80s had been bought in 1991 thanks both to the World Bank Special Programme and the bilateral initiatives taken in this field. The bilateral debt is owned by countries most of whom are not members of the Club de Paris.
4. The nine Clubs de Paris which addressed the Nigerien debt have not deeply affected its stock. They contributed to the bilateral debt alleviation, even though the effects of these Clubs de Paris have been reduced by the essentially multilateral Nigerien debt structure. The debt cancellation obtained during the period has not been sufficient to compensate the stock increase.
5. The quasi total of the debt is in currencies, that exposes it to the exchange rate fluctuations. After the French Franc devaluation in January 1994, the Nigerien debt stock has doubled its volume and its service.

 

1... Some indications about the evolution of the debt situation since 1980

 

1.1… The stock and service debt evolution (1990-1998)

6. The following chart and diagram n°1 show an increase tendency of the Nigerien debt stock of 85% between 1980 and 1990 and more of 250% between 1990 and 1998, with the doubling of its volume in 1994 when the FCFA was devaluated by 100%. The chart and the diagram show a less important debt service increase, thanks to the effects of decisions taken by the different Clubs de Paris.

Chart and diagram N°1 showing the stock and service

Nigerien debt evolution

Billions of FCFA	1980	1990	1991	1992	1993	1994	1995	1996	1997	1998
Debt stock	182,3	337,4	320,5	336,5	359,9	705,8	673,1	696,4	815,2	859,1
Annual increase %	0,85	-0,05	0,05	0,07	0,96	-0,05	0,03	0,17	0,05
Debt service	25,8	41,93	25,95	21,97	25,6	66,73	51,2	42,2	51,9	50,3
Annual increase %	0,63	-0,38	-0,15	0,17	1,61	-0,23	-0,18	0,23	-0,03	-1,00



Sources : Compilation of UNDP/CCA database, documents from the Debt Direction

of the Finance Ministry and documents from the BW Institutions

7. To qualify to and benefit from the Bretton Woods Initiative, the HIPC constitutes presently for the Heavly Indebted Poor Countries (HIPC) the only framework to address their debt management. Three conditions have to be satisfied : i) a successful implementation of an Enhanced Structural Adjustment Facility (ESAF), a condition which can be considered as satisfied by Niger since the IMF Steering Committee has already approved in August 1998 the implementation of the third and final year of the 1996-99 EASF ; ii) the net present value of public and publicly guaranteed external debt in percent of export within the range of 200-250 percent ; iii) the ratio of the debt service to export within the range of 20-25 percent. The following chart and diagram n°2 show that these conditions have been totally satisfied and for example in 1998, the ratio of the debt service to export value had been higher than 41 percent.

Chart and diagram N°2 showing the evolution

Of the ratio of debt service to export

	1980	1990	1991	1992	1993	1994	1995	1996	1997	1998
Debt Service	25,8	41,93	25,95	21,97	25,6	66,73	51,2	42,2	51,9	50,3
Goods and service Exportations	128,8	93,3	96,2	85,4	85,3	143,4	161,1	172,3	177,5	121,6
Ratio debt/export in %	20,0	44,9	27,0	25,7	30,0	46,5	31,8	24,5	29,2	41,4

 



Sources : Compilation of UNDP/CCA database, documents from the Debt Direction

of the Finance Ministry and documents from the BW Institutions

 

1.2… The negative effects of the debt burden on the resource mobilization

8. The treasury tensions which disturbed the Nigerien macroeconomic figures have led to the suspending of cooperation situations with some partners in development affected by the debt arrears. Some times, partners have taken decisions to suspend the disbursement, consequently stopping the on-going development projects and programmes. Among creditors who have stopped their cooperation with Niger because of debt arrears, during a more or less long time, the European Investment Bank, Arabic Development Funds, and Regional or Sub-regional Development Banks and Funds like African Development Bank, West African Development Bank, ECOWAS Development Fund, etc.
9. The negative effects of arrears accumulation on the Official Development Aid (ODA) evolution, have been so impeding that the Ninth Club de Paris decided to take in charge all the outstanding debts which must be paid to creditor members of the Club de Paris, after the end of February 1998. A special account has been consequently opened at the Banque de France.

2... Some indications of the debt situation at the end of 1998

2.1... Global Indications on the stock and service debt at the end of 1998

10. As indicated in the following chart and diagram n°3, the external stock volume at the end of 1998 has been of 859.1 billion of FCFA. The debt service volume has been of 50.3 billion of FCFA. The debt stock has been characterized as follows :

• 599.4 billion of FCFA ie 69.7% were constituted by multilateral debt ;
• 132.6 billion of FCFA ie 15.4% represented debt issued from the different Clubs of Paris ;
• 127 billion of FCFA were constituted by bilateral debt ;
• the remaining, less than 1% represented the commercial debt.

1. Concerning the debt nature regarding the State implication in its generation and development, the situation was as follows at the end of 1998 :

• 798.5 billion of FCFA ie 93% of the global debt stock volume has been directly contracted by the Government ;
• 58.1 billion of FCFA ie 9.9% represented the retrocede debt, of which more than 80% were budgeted ;
• the remaining was constituted by endorsed debt, totally quasi budgeted.

1. The other particularities of the Nigerien official stock debt concern : i) the importance of the contracted debt volume not yet mobilized ; ii) the importance of arrears concerning both the stock and service debt ; iii) the volume of debt cancellation and remittance ; iv) and the volume of the effects of rescheduling operations undertaken in the framework of the nine Clubs de Paris :

• 281.7 Billion of FCFA ie 32.8% of the global debt stock constituted the State contracted debt not yet mobilized ;
• 53.7 Billion of FCFA from which 34.9 billions as principal and 18.8 billions as outstanding interest affected the stock debt up to 6.2% ;
• During 1998, the debt cancellation of 5.2 billion of FCFA and the debt remittance of 4.5 billions has represented about 1% of the debt stock.
• Moreover, the rescheduling operations have affected the stock debt with 2.8 billion of FCFA in terms of the principal, 4.5 billions in term of interest, 10.6 billions in terms of principal arrears and 5 billions in terms of interest arrears.

1. Concerning the outstanding debt eligible in 1998, its volume was of 50.3 billion of FCFA, effective reimbursement have been of 20.4 billions ie 40% of the outstanding debt service and constituted 17% of goods and services exportation value and 12.5% of budget resources.

 

Chart and diagram N°3 showing

the stock and service evolution in 1998

INDICATORS FOR 1998	Billions Of FCFA
Debt stock up to 31/12/98	859.1
Multilateral debt	599.4
Multilateral debt /stock debt in %	69.7%
From IMF	42.5
Bilateral debt	127.0
Bilateral debt/stock debt in %	14.8%
Guaranteed commercial debt	0.1
Debt issued from Club de Paris	132.6
Club de Paris debt/stock debt %	15.4%

 

Diagram N°3 concerning indications

On debt stock and service



Sources : Compilation of UNDP/CCA database, documents from the Debt Direction

of the Finance Ministry and documents from the BW Institutions

 

2.3… The currencies’ debt composition

2. The Nigerien contracted debt is mainly made in currencies. From a global debt volume of 859.1 Billion of FCFA as defined by the end of 1998, only 47.8 billions ie 5.5% were in FCFA. As it is shown on the following chart and diagram n°4, nearly 30 currencies are concerned, the main ones are :

• Debts contracted from Bretton Woods Institutions in SDR currency represented 347.7 billion of FCFA ie 40.4% of the global debt volume ;
• Debts contracted in US.$. were 164.3 billions ie 19.1%
• Debts in French Francs were 123.2 billions ie 14.3% ;
• Debts contracted in several Arabic currencies were 75 billions ie 8.7% ;
• The remaining was in several other currencies.

1. From the first of January 1999, the fixed relation between the FCFA and the Euro will facilitate in the future the management of the Nigerien debt vis a vis of the eleven country members of the Euro zone. On the 31^st December, this kind of debt represented 163.2 billions of FCFA, three quarter of which were in French Francs.

Chart and diagram N°4 showing

the stock and service debt evolution in 1998

	Billions of FCFA	Total %
SDR	347.7	40.5%
US.$.	164.3	19.1%
FF	123.2	14.4%
Arabic currencies	163.3	19%
Other currencies	60.6	7%

 

 

 



Sources : Compilation of UNDP/CCA database, documents from the Debt Direction

of the Finance Ministry and documents from the BW Institutions

3… Some comments on the short and medium terms of the Nigerien debt future

2. It is confirmed that at the horizon 2000, Niger should be implementing an active phase of the HIPC Initiative. Doing so, Niger should be able to restructure its debt in such a manner that its stock and service levels will be compatible to an autonomous and sustainable debt management which means that its economy will ensure on its own the debt amortization. More so, Niger hope to benefit from the expected positive results coming from the international community which is pleading for more comprehensive and supportive measures profitable to poor indebted countries. Even within the G8 Group strong voices rise to make the HIPC conditions more attractive in the future.
3. In collaboration with the Bretton Woods institutions, the Nigerien Government prepare its proposals to be submitted to the BW’s Steering Committee to be concerned as soon as possible by the active HIPC implementation phase. Several charts and diagrams are elaborated on a yearly, quarterly and even monthly basis to assess and follow-up all movement affecting the structure or the evolution of the stock debt, its service and its arrears, including any debt rescheduling and/or cancellation obtained from partners in development, members or not of the Club de Paris.
4. Till date, several elaborated scenarios are being built on the minimal conditions as defined by the Naples conditions for the countries eligible to the HIPC rescheduling initiatives. With the implementation of theses conditions, Niger expect to maintain during the period 1999-2001 its debt service around 50 Billion of FCFA. But the application of more attractive conditions as those of Lyon and possibly other best conditions expected in the future will lead in 2001 and after to a more consequent alleviation of the debt and its service.
5. Nigerien officials are aware that they have to pursue their efforts in managing their debt correctly to benefit from the HIPC initiative and other more interesting facilities. They have to participate with significant contributions in all meetings organized at the sub-regional, regional and international levels .