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States’ debt deferral won’t harm creditors – FG assures

Mrs Kemi Adeosun, Finance Minister
Mrs Kemi Adeosun, Finance Minister
Federal Government, Sunday, insisted that its decision to defer the debts owed by states from the bailout they received last year would not have any negative impact on creditors and bondholders.
Minister of Finance, Mrs. Kemi Adeosun, who made the clarification in a statement, said all debt repayments due to creditors of the states would be fully paid despite the deferral.
She said in a statement issued by her Media Adviser, Mr. Festus Akanbi, that the Federal Government would make sure that it offset the due debts against the liabilities owed by the states.
A total of N689.5bn has been disbursed as salary bailout to the state governments, according to figures from the Central Bank of Nigeria.
The statement read in part, “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.
“The Federal Government will make the due debt repayments, which will 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 was not a bailout, but rather a responsive measure by the Federal Government to put the states in a better position to meet their salary obligations. The deferral amounts to a total of N10.9bn.”
The statement noted that the deferral would bring relief to all the states, adding that further deferrals would be subject to the agreement of a fiscal restructuring plan to be prepared by each state with clear measurable objectives.
It added, “The (Finance) ministry is keen on ensuring that the programme of fiscal discipline being driven by the Federal Government is replicated in all tiers of government, including elimination of payroll fraud and increased spending efficiencies in the overheads.

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