Restructuring States’ Loans' says CBN

The Central Bank of Nigeria (CBN) has given states till today (July 8) to submit the list of their loan obligations and other indebtedness, to enable it assist in restructuring them to long tenure.

 

Godwin Emefiele, governor of the CBN, said on Monday during the extra-ordinary meeting of the Federation Accounts Allocation Committee (FAAC) that the apex bank was willing to assist indebted states in restructuring the loans owed the commercial banks and directed them to submit details to the CBN, on or before today.

Emefiele said the CBN would schedule a meeting with the states, upon receipt of the required data, and expected  that the process would be completed before next week.

The CBN’s assistance would come in the form of concessionary rates to interested states and is part of the comprehensive N713.7billion bail out package by the President Buhari government to help most of the states pay workers salaries owed for months.

The bail out package includes N413.7billion  special intervention funds and the balance of about N250billion to N300billion, which is soft loan to states, it was gathered.

The finance ministry clarified yesterday that the money shared by FAAC includes N344,999,381,383.30 net income generated by the Federal Inland Revenue Service

The Federal Government was allocated N181,745,674,112.72 (52.68%); the 36 States got N92,183,834,705.62 (26.72%) while the Local Governments got N71,069,872,564.96 (20.60%).

“It should be noted that no money was taken from the Excess Crude Account (ECA) for sharing. The balance in the ECA still remains at USD2.1 billion,” the ministry stated.

Nigerian government, particularly states are hugely indebted. The total debt stock as at March, 2015 is put at $63.5 billion or N12 trillion.

External Debt Stock (FGN + States) stood at $9.4 billion (about N1.9 trillion), according to the Debt Management Office (DMO) data.

Domestic Debt Stock (FGN Only) stands at $43 billion or N8.5 trillion, while that of states is put at $10,9 billion or $1.69 trillion.

Lagos is Nigeria’s most indebted state, with $1.17 billion in debts. It is followed by Kaduna with $234 million , Cross River ($142 million), Edo ($123 million), Ogun ($109 million), Bauchi ($88 million), Katsina ($79 milllion), Osun ($74 million), Oyo ($72 million) and Enugu ($69 million).

The states that are least indebted are Taraba, (N4.56 bn), Borno (N4.61 bn), Delta (N4.85 bn), Plateau (N6.19 bn), Yobe (N6.25 bn), Benue (N6.62 bn), Abia (N6.76 bn), Zamfara (N7.11 bn) and Kogi (N7.16 bn).

Osun State is one of Nigeria’s poorest states, but ranked 9th in the list of the most indebted states in the country. One of its debt-accumulating activities was the N11.4 billion sukuk which made headlines in 2013 (Sukuk is the Arabic name for financial certificates, but commonly refers to the Islamic equivalent of bonds).

Emefiele informed the state governments that the Federal Government was worried about the inability of some states to meet their obligation to their workers in the area of monthly wages.

He noted that the inability of most states to pay salaries was due to the huge debt hanging on their necks. Emefiele observed that most states take short term loans to finance long term projects and servicing their monthly obligations to the banks hampers cash flows, thereby restricting them from paying  salaries.

The governor advised recipients of the CBN loans to prioritise salary payment as their first line charge, before meeting other obligations.

Onyinye Nwachukwu