States Debt Deferral – FG assures creditors

As a fall out of 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.

According the Federal Ministry of Finance, the Federal Government will make the due debt repayments, which would be offset against liabilities owed to the states. Hence all creditors, including bondholders, will not be adversely impacted.

The Ministry further reiterated that the deferral is not a bail out but rather a responsive measure by the Federal Government to put States in a better position to meet their salary obligations. The deferral amounts to a total of N10.9 billion.

All states will receive the relief in this instance, 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.  Enhanced financial transparency by the publication of audited accounts and submission of debt profile may also be required.