The Paris Club agreed to cancel 60% of a total of USD 30.515bn owed to it by Nigeria. This translates to a debt relief of USD 18.309bn from the debt burden. The federal government has also announced a plan to pay back some of the remaining debt stock owned to Paris Club with proceeds from the excess crude proceeds. This would be subject to approval of the Council of State.
Nigeria owes 85% of its total external debt of USD 35.9bn to the Paris Club, which has 15 creditor countries, as its members. The remaining 40% of the Paris Club debt would be settled through a debt buy-back operation after the country pays arrears of about USD 6bn on the USD 30bn outstanding debt.
The Paris Club while agreeing to write off Nigeria's debt partially took note of the economic reform programme implemented by the government since 2003. Newspaper Thisday quoted the Ministry of Finance, Okonjo-Iweala, as saying that the 60% debt write-off compares favourably with the USD 40bn write-off for 18 low-income heavily indebted countries out of which 14 are African nations.
She added that the Paris Club has agreed to recognise the country's implementation of its reform programme under the International Monetary Fund (IMF) monitoring, as a legitimate instrument that fulfilled the requirements for debt relief.