FG Rules Out 27 States’ N10.9b Loan Repayment

At the end of the meeting of the National Economic Council (NEC), which held at the State House in Abuja, the Finance Minister, Mrs. Kemi Adeosun said that the federal government has arrived at a decision which is to not make deductions from States’ Federal Account Allocations for the month of March due to the fact that they do not have enough resources to meet their obligations such as “paying their workers’ salaries”.

According to her, receipts from crude oil sales makes it difficult for states to thrive. She said: “This is an update on the financial situation in the states: it was discussed extensively that currently the Federation Account receipts are among the lowest that has been seen in recent memory.

“We are looking at N299.7 billion this month (for March allocation) and that is because of the very low oil prices recorded in February and January, if you remember oil prices went as low as $28 and $31 and that has affected receipts to the Federation Account.

“As a result of which I approached the president at the behest of the state governors that we defer the loan deductions from the Federation Account entitlements and the aim of this is to ensure that we support the states through this difficult period to enable them meet their salary obligations.

“The government is very committed to stimulating this economy and recognises that the ability of states to meet salary obligations is very important to getting the economy moving again, and so to that end, the president approved that deferral.”

At the NEC meeting, Adeosun said she presented and gave an account of interest on a report on the balance in the Excess Crude Account (ECA), which she said stood at $2.75 billion.

“The second update given was on the constitution of the search committee for the board of the Nigerian Sovereign Investment Authority (NSIA; Sovereign Wealth Fund). I gave that presentation and nominated six persons from the six geopolitical zones, four men and two women, who would search for board members for the Nigerian Sovereign Investment Authority.”

At the meeting yesterday, the board came to a conclusion that obligatory repayments, due to the federal government from the states in respect of their restructured loan obligations are being deferred for the current month of march due to the challenges that about 27 states are currently experiencing.

“The deferral amounts to a total of N10.9 billion. This is to ensure that the states are in a better position to meet their salary obligations. We are not able to guarantee that all states will be able to meet their salary obligations, as each state’s situation is dependent on its own cost profile and other obligations it may have, but this initiative is to better position them to do so,” the ministry added.

All states will receive the relief this month (for March allocation), but noted that further deferrals will be subject to the agreement of a fiscal restructuring plan to be prepared by each state with clear measurable objectives said the Minister