In order to rationally undertake external debt management, government established an inter-agency committee under the supervision of the Federal Ministry of Finance (FMOF) to thoroughly conduct the process of debt data capture, verification and reconciliation. The committee worked in close liaison with the Debt Management Division of FMOF’s External Finance Department, the Accountant-General’s Office and the Central Bank. It studied in detail all debt issues, case by case, regarding borrowing and repayment terms, date and reason for borrowing, amount repaid, interest paid, amount outstanding, related repayment profile, etc. This provided for the first time in the history of the Federal Republic of Nigeria the details necessary to ascertain the debt stock and streamline the route for effective management. The object output and process were later computerized to provide authentic computer recording of the debt stock, in addition to a reporting format. The exercise helped a great deal in reaching agreement with the World Bank and the IMF, as regards figures they carried on Nigeria’s external indebtedness and in winning respect for the competency of Nigerians – rather than more reliance on data provided by externals, as had been the practice hitherto.
The committee’s work informed government’s evolving debt strategy. Accordingly, government continued to take necessary measures to reduce the country’s external debt service burden to within 30 percent of export earnings. Firstly, negotiations with creditors were pursued with a view to securing more favorable debt service relief in the form of further debt rescheduling, debt and debt service reduction and debt cancellation. Secondly, government continued the cautious use of debt conversion, initiated in early 1988, as a strategy for reducing the external debt stock. Thirdly, the policy of restricting external borrowing and emphasis on concessional loan priority projects was retained. Under that policy, Government borrowing was limited to soft loans from multilateral institutions such as the World Bank, African Development Bank, European Investment Bank, etc. The debt stock, which by end of 1985 was $19.36 billion had reached $28.71 billion by end 1993, largely through interest charges, penalties and the like, despite reduction in the interim.