The Federal Government has granted approval for a fresh loan to the tune of N656 billion for the 36 states of the country.
The details of the loan as disclosed by the National Executive Council (NEC) at a meeting which was held on Thursday, each state is expected to receive N18.2 billion.
According to a statement released by the spokesman to the Vice President, Laolu Akande, the loan is to assist states and will be released in six tranches over a six-month period.
“In a bid to help state governments meet financial obligations, especially the previous budget support facility due for repayment, President Muhammadu Buhari has approved a fresh N656billion Bridge Financing Facility to the 36 States. Each State would receive N18.2B,” the statement reads.
“This was disclosed today at NEC’s 121st meeting (10th in 2021), which was held virtually and was presided over by Vice President Yemi Osinbajo, SAN, with State Governors, Federal Ministers, the Central Bank Governor, and other senior government officials in attendance.
“The Honourable Minister of Finance Budget and National Planning, Dr Zainab Ahmed, informed the Council that the Bridge Facility is now being processed by the Central Bank of Nigeria (CBN).
“The approved Bridge facility of N656.112billion will be disbursed in six tranches over a period of six months to the States. Expectedly, each of the 36 States will have a total loan amount of N18.225billion; with a 30-year tenor, and a 2-year moratorium at an interest rate of 9%.
“The Facility is to help the States afford the repayment of previous bailout facilities guaranteed for them by the Federal Government.”
The federal government had extended the conditional facility to states in 2017 through the CBN to help cushion the impact of dwindling resources and help meet their various obligations.
At the completion of the two-year grace period, the deductions were put on hold for a year to allow states to stabilize their finances due to the COVID-19 pandemic.
The Governor of the Central Bank of Nigeria {CBN}, Godwin Emefiele, in May 2021, had called on states to commence repayment of the previous bailout fund, but the governors had requested for a postponement.
However, in July, the Central Bank of Nigeria (CBN) and state governors reached ab agreement for the commencement of deductions of the budget support facility.
In a statement released on Thursday, after the agreement reached in July between the governors and the apex bank, “the States sought further support leading to the idea of bridge financing”.
