Results of the 2005 debt relief agreement between the Paris Club and Nigeria

1. An evaluation conducted by ECORYS/OPM in 2010/11 for IOB Presentation by Geske Dijkstra, team leader (Erasmus University Rotterdam and IOB) Results of the 2005 debt relief agreement between the Paris Club and Nigeria

2. Methodology: Theory-based

3. Debt stock in US$ billion, by creditor

4. 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) The 2005 agreement with the Paris Club

6. 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 Outputs:Stock and flow effects

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

8. 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 Conditionality effect

9. 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 4. Outcomes

10. External debt sustainability ratios, actual and counterfactual, in %

11. Some poverty indicators

12. 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 5. Impact and conclusions

13. Growth rates, in %