" ITREALMS: FG says state debt deferrals not bail outs

Monday, April 25, 2016

FG says state debt deferrals not bail outs

The Federal Government of Nigeria has clarifies that State debt deferrals are not bail outs, just as creditors will not be adversely impacted, reports ITRealms.

FG through the Federal Ministry of Finance, said that further to the states debt repayment deferral for the month of March that was announced last Thursday, the Federal Ministry of Finance has given clarification.

According to the a press statement endorsed by the Special Assistant on Media to Honourable Minister of Finance, Festus Akanbi made this clarification on behalf of his principal, Mrs Kemi Adeosun, the debt repayments due to the States’ creditors will be fully paid notwithstanding the deferral.

The Federal Government, the ministry said, will make the due debt repayments, which would be offset against liabilities owed to the States, thereby affording all creditors, including bondholders, not to be adversely impacted.

Further, the Ministry 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,” part of the statement read.

The Ministry equally said its 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,” the ministry cautioned.

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