The Federal Government has deferred state loans repayment to the Federation Account to allow states have enough money in their coffers to pay workers salaries and meet other obligations in their states.
Minister of Finance, Kemi Adeosun, speaking to pressmen at the end of the National Economic Council (NEC) meeting on Thursday said the council had suspended further deduction of state governments’ loans from their accounts maintained in the Federation Account.
The current economic situation in the country according to the Minister, necessitated the deferral of the loans repayment.
Many of the states have taken loans which are repaid through monthly deductions from funds accruing to them in the Federation Account.
Elaborating on the update of the financial situation of the states, Kemi Adeosun said it was discussed extensively that currently the federation account receipt are among the lowest that has been seen in recent memory, which is at N299 billion this month and that is because of the very low oil prices that was recorded in January and February.
Recalling that oil prices went as low as $28 and $31 per barrel and that has led to a very low federation account, as a result of this, the Minister said she approached the President and told the governors that the state loans deduction be deferred from the federation account entitlement.
The aim of this is to ensure that the federal government supports the state governments throughout this difficult period in order for them to meet salary obligations.
Kemi Adeosun said the government is very committed to stimulating the economy and recognizes that ability of states to meet salary obligations is very crucial in getting the economy moving again.
The suspension of deduction takes effect from April and may be extended, depending on the debt profile and social needs of states. However, the postponement does not in any way connote financial bailout for the states.
The NEC meeting was chaired by Vice President Yemi Osinbajo at the Presidential Villa, Abuja. The Minister was accompanied by Nasarawa State Governor, Tanko Almakura and Corp Marshal of the Federal Road Safety Commission (FRSC), Oyeyemi Boboye while briefing State House correspondents.