FROM THE OFFICE OF PUBLIC AFFAIRS

Secretary of the Treasury Lawrence Summers in a press conference held in Abuja with journalists on June 12, discussed the US position on debt relief for Nigeria: the Secretary stated: "The US will support a generous Paris club debt rescheduling for Nigeria this year. Beyond this year, provided Nigeria makes significant progress on meaningful economic and financial reform, we would support positively, consideration by the international financial community of multilateral debt reduction for Nigeria consistent with, and on the basis of, Nigeria's continued performance under appropriate arrangements with the IMF and the World Bank."

The text of the Secretary's press conference follows:

Thank you all very much for coming. I'm glad to have this opportunity to speak for a few minutes about the meetings that I had with Parliamentarians last night and with the President, Vice President, Finance Minister and Central Bank Governor this morning. I came to Nigeria because we in the United States believe that what happens in Nigeria is very important for what happens in the entire economy of Sub-Saharan Africa in much the same way as what happens in the United States is important for the global economy. I came to Nigeria because this is a moment of both great challenge and a moment of great opportunity in Nigeria. A moment of great challenge because of the economic difficulties of past policies and because of the rising human development challenges in Nigeria; a moment of great opportunity because of a democratically elected government and because of a growing international sense of the importance of supporting economic development in Sub-Saharan Africa. I also came because I think I'm the First U.S. Secretary of the Treasury to have come to Nigeria. And I come, we come, because there is a sense that the financial choices made by Nigeria in conjunction with the international financial institutions will have profound consequences in the years ahead.

There were three main themes in all of our discussions: first, we discussed questions of economic development strategy for Nigeria and there was, I think, a shared sense in all of our discussions on the importance of macro economic stability, on the importance of moving ahead with privatization, on the importance of establishing the rule of law, on the importance of greater transparency in budgeting procedures and the provision of greater resources for the social sectors. It was stressed that these were important Nigerian government objectives. Both the President and Vice President were very strong in saying that privatization, scaling back subsidies, more social investments ... that these were their priorities, they didn't come from anywhere else.

The second subject that we discussed was the financial environment and Nigeria's debt burdens. The Parliamentarians last night very strongly, and the president and other officials I met with this morning, all stressed rightly that Nigeria carried a very large debt burden as a consequence of past borrowing. past borrowing in large part had not been successful in generating investments that created the wherewithal to pay it back. And they stressed that the burden of debt service would potentially adversely impact key social investments such as health and education. I stressed in responding to this issue the overwhelming importance of assuring that resources were used well in the context of any type of support for Nigeria and emphasized the significant benefit that Nigeria was receiving as a consequence of the uptake in the price of oil that had taken place this year. But I was then able to remind them that the United States will support a generous Paris club debt rescheduling for Nigeria this year, and that we are working towards that end in the Paris club. Beyond this year, provided Nigeria makes significant progress on meeting economic and financial reforms, we support positive consideration by the international financial community of multilateral debt reduction for Nigeria consistent with and on the basis of Nigeria's continued performance under appropriate arrangements with the IMF and the World Bank. I stressed that any support for debt reduction lay in the future and was premised on sound Nigerian economic policy to use resources well. But I did indicate that if such policies were forthcoming, the United States would be prepared to support debt reduction in the context of the international consideration of the issues.

The third issue that we discussed was a more detailed discussion of the links between health and social investments and economic performance. I remarked on the experience in the U.S. and many countries that apart from the enormous human dimensions of the issue, successful aids prevention programs paid off in the sense of improving economic performance and reducing subsequent budgetary outlays. I congratulated President Obasanjo on the recent African conference that he had hosted addressing malaria issues and stressed the importance of a clear commitments around the aids issue since Nigeria is close to an inflection point with respect to that pandemic. The president and vice president both in our conversations made clear their desire to see a summit of African leaders take place to address the aids issue and that is something that President Clinton has wanted to see for some time. So I think we can look forward with this commitment to that taking place.

Let me say finally that I think these have been productive and useful discussions. Nigeria's economic challenges are very, very grave. The various challenges were not created in a week or a month or a year and they certainly will not be addressed in a week or a month or a year, but I believe that the democratic opportunity that Nigeria now has provides the best window of opportunity that Nigeria has enjoyed in many years and it is an opportunity that the united states is very much committed to working with Nigeria to try to maximize it.

I will stop there and am happy to respond to any questions.

Mr. Secretary, you may (inaudible) strike option called by the organized labor of Nigeria. In your opinion does it reflect a limit (inaudible)? The crisis in Kaduna which lingered on for a couple of weeks and now we have a serious crisis going on?

Secretary Summers: Registering dissent is an important part of democracy, but I think that it is something that always has be done in a rule based way that does not interfere with the rights of others. From conversations that I had I sensed that the Nigerian government knows that the decision it made regarding oil prices was a consequential decision and that it was one that government felt was important to take both for budget reasons because of a desire to reallocate funds that were going to petroleum subsidies to other perhaps higher priority uses and because of issues of efficiency in the petroleum sector where large amounts of resources were being lost or stolen or flared as a consequence of the price controls that were in place. I think there is no question that establishing a sense of stability, governance, permanence, not of the position of any particular individual, but of the basic rule of law is very, very important to Nigeria's economic future and I think that is a process that is underway. Prospects for success to be maximized is greatest if democracy is able to show economic results. That is part of why our conversations focused on issues of investment, health and investments in education. That is why we talked about the need in the Niger Delta and other places to focus on the development of non-petroleum exports.

Question: (Inaudible) interested in helping Nigeria on the issue of debt (inaudible) as long as Nigeria was relying on the policies of the IMF and the World Bank (Inaudible) we in Nigeria believe that most policies of the IMF and the World Bank that are trying to, forcing (inaudible) to apply to their economies are not in the interest of the public . For instance, this issue of fuel (inaudible) is one case in point that Nigerians see as very detrimental. Do you think it is good for the citizens of the country for the government of that country to apply certain policies that will have adverse effects or to the detriment of the citizens of the country in order to satisfy (inaudible).

Secretary Summer: I believe that democratically elected governments do their jobs best, serve their people best, and are obliged to pursue the economic policies that they believe will best serve the interests of their people in a complex global economy. And representatives in the Nigerian government with whom I spoke in the executive branch, all assured me that the policies being pursued represented their best judgment as to how to improve living standards in Nigeria. I don't think it is appropriate for international organizations to impose programs on countries. But I do think it is appropriate for international organizations, or for neutral countries that are providing debt relief, to insist before they provide resources that there be a policy framework in place that will assure that the resources are used for effective human development rather than flowing into Swiss bank accounts. It seems to me that it is appropriate for democratic governments, as many democratic governments around the world do, to certainly accept that idea that a framework that is technically right and will assure that assistance resources are used for the intended purposes will be in place. There was no disagreement or friction on this question in my conversations with Nigerian government officials.

Question: From your knowledge of Nigerian economy, do you think the time is right for the Nigerian government (inaudible).

Secretary Summers: The questions of precise timing are not something that I feel knowledgeable enough to have a specific judgement about one way or the other, but I certainly felt that the arguments that I was exposed to that stressed the importance of reallocating the budget to the highest priority uses and stressed the importance of efficiency in the petroleum sector and stressed the general desirability of removing price controls and deviations of prices from world prices, those arguments were all in accord with other experiences that I have seen around the world.

Question: (Inaudible).

Secretary Summers: Let me answer the question and assistant secretary rice may have something to add if I get it wrong. The President wants to visit Nigeria as he has said on many occasions because he very much shares the sense of excitement that surrounds Nigeria's transition to democracy and regrets that political conditions preclude his visit to Nigeria during his trip to Africa two years ago. At this time there is not yet a scheduled date for the visit, but the President is very eager to come.

Question: (Inaudible) debt that Nigeria has should be canceled. Did you discuss that with members of the government? Are there plans to unilaterally or negotiations to reduce their private debt (inaudible).

Secretary Summers: We did not have a detailed discussion of that. In Nigeria's case as in others, it is important to remember that debt is a contractual and legal obligation and so any kind of resolution that is not cooperative with creditors is always very much to be avoided. In the context of Nigeria's ongoing discussions with the Paris club we would hope and expect that the principle of comparability would be respected in a broad way as it has been in other countries. And Nigerian officials indicated to us that they were going to be seeking advisors with respect to the management of all their debts both in the public and private sectors.

Question: (Inaudible).

Secretary Summer: Well I think that the democratic opportunity, the commitment to reducing corruption, and the movements toward greater transparency are all very constructive in this regard, but ultimately it is going to be choices that the Nigerian government makes both in the design of policy and it's execution that are going to determine what happens in Nigeria. What I think is surely true is that current moment affords very important opportunities for substantial increases in crucial investments in both the health and education of the Nigerian people.

Question: (Inaudible)

Secretary Summers: I think that is always the case in contexts where debt issues are being addressed we would rely on satisfactory programs being in place with the IMF and the World Bank and I would expect that essential elements of those programs would be budget allocations that assure that the savings from debt relief would go to education and health care, would be programs that would assure that the prospects for economic growth were maximized in terms of macro economic stability and in terms of the focus on the government actually carrying through on what it has said it wants to do in the area of privatization. But I want to stress that there is no desire to impose a program on the Nigerian government and I was encouraged by the indications that the President and Vice President gave with respect to their policy intentions. What is now going to be crucial is their effectiveness in carrying through those policy intentions.

Thank you very much.