Creditors have got some assurance from the Federal Government on states’ debts that were due for payment last month.
The debts will be paid, the Ministry of Finance, in a statement, said.
It said the clarification became necessary following the states’ debt repayment deferral announced last week.
“Further to the states’ debt repayment deferral for the month of March that was announced last Thursday, the Federal Ministry of Finance has clarified that the debt repayments due to the states’ creditors will be fully paid, notwithstanding the deferral. All creditors, including bondholders, will not be adversely impacted,” it stated.
It said the deferral is not a bailout but “a responsive measure by the Federal Government to put states in a better position to meet their salary obligations”. The deferral is N10.9 billion.
All states will receive the relief in this instance, but further deferrals will be “subject to the agreement of a Fiscal Restructuring Plan to be prepared by each state with clear measurable objectives.”
The statement said the ministry was keen in ensuring that the financial discipline being driven by the Federal Government is replicated in all tiers of government, including elimination of payroll fraud and increased spending efficiencies in overhead. It called for enhanced financial transparency by the publication of audited accounts and submission of debt profile.
President Muhammadu Buhari approved the states’ deferred payment on account of the backlog of salaries owed by many states to their workers and the abysmally low revenue (aboutN299.7billion) available for sharing for the month of March.
The government said last week that with about 27 states experiencing challenges meeting their salary payments and in response to the obligatory repayments due to the Federal Government from the states in respect of their restructured loans, the Federal Government offered to defer for March, the repayment of their obligations to all their creditors. The deferral amounted to a total of N10.9 billion.
