The federal Ministry of Finance has warned state governments that Thursday’s debt repayment deferral is not a bailout.
According to a statement issued by the ministry, the deferral, which amounts to N10.9 billion in total, 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 said.
All states, the finance ministry said, “will receive the relief this month. However, further deferrals will be subject to the agreement of a Fiscal Restructuring Plan to be prepared by each state with clear measurable objectives.”
The ministry said it was keen to ensure that the programme of 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.”
The ministry noted that for enhanced financial transparency with the publication of audited accounts and submission of debt profile may also be required.
This, the ministry said, was designed to move the states towards fiscally sustainable practices; a key objective of the federal government to ensure that Nigeria recovers from the current economic challenge.
The ministry noted that about 27 states are currently experiencing challenges meeting their salary payments and “in response to the above, obligatory repayments due to the Federal Government from the states in respect of their restructured loan obligations are being deferred for the current month.”
The Federation Accounts Allocation Committee (FAAC) meeting, which took place on Thursday, presented the lowest shared sum in more than five years with less than N300 billion in revenue; the result of low oil prices in January and February.
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