Brazil will receive only US$ 67.3 million of the US$ 150.4 million owed to it by Nigeria, which incurred the debt over 20 years ago in the form of loans and export insurance.
The other US$ 83.1 million will be cancelled, pursuant to an agreement signed Thursday, December 29, by the acting Brazilian Minister of Finance, Murilo Portugal, and the Nigerian minister of Finance, Ngozi Okonjo-Iweala.
Portugal affirmed that, despite the cancellation of part of the debt, the agreement represents "an important step for bilateral relations."
According to him, it was an old debt, without solution, and the agreement will permit the "revitalization" of commercial and financial relations with Africa’s largest petroleum producer.
The political decision favoring an agreement between Brazil and Nigeria was announced by president Luiz Inácio Lula da Silva during an official visit to Nigeria in April of this year, for the sake of what was termed Brazil’s "repayment of its social debt" to Africa, as the President put it at the time.
The agreement, according to the Nigerian Minister, who is in Brazil on a visit, will enable Petrobras and the NPC (the Nigerian Petroleum Company) to transact business directly, without intermediaries, as they do at present.
Moreover, Brazil wants to export more to that country, in order to readjust the trade balance (exports minus exports), which is grossly unfavorable to Brazil.
Data from the Ministry of Development, Industry, and Foreign Trade show that Brazilian sales to Nigeria amounted to US$ 505 million last year, as against the US$ 3.49 billion spent on purchases, mainly of petroleum and petroleum derivatives.
This represents Brazil’s largest trade deficit with a single country, and it is expected to increase this year to something on the order of US$ 4 billion.