Press statement from the presidency
“The implementation of a three-pronged financial intervention of President Muhammadu Buhari to assuage workers plight and support the states is now in progress. Specifically, state governments will start benefiting from the special intervention fund of between N250B to N300B in a matter of weeks.
Currently, planning meetings are being held between members of the Federation Account Allocation Committee, FAAC and CBN, on the one hand, and also between CBN and commercial banks on the other hand, regarding details of the special intervention fund and the debt relief program of the President for the states.
Such meetings are reviewing loan profiles of the states, issues around restructuring of existing loans including time span, and reconciling the figures.
Already, it has been agreed that existing state loans be restructured for 20 years, and regarding the bond option, the rates to be applied would be market-based but with a cap to make it affordable. Within weeks from now, the states are expected to start benefiting from this two other parts of the presidential intervention. It would be recalled that the details of the presidential intervention are in three parts: The sharing of about $2.1B in fresh allocation between the states and the federal government. The money was sourced from recent LNG proceeds to the federation account, and its release okayed by the president.
A Central Bank-packaged special intervention fund to the tune of about N250B to N300B that will offer financing to the states. This would be a soft loan available to states. A debt relief program by the Central Bank of Nigeria and Debt Management Office, DMO, which will help states convert their commercial bank loans into bonds, and restructuring such loans by extending their life span thereby reducing the debt-servicing expenditures of the states.
By extending the commercial loans of the states, the third part of the presidential intervention would therefore make available more funds to the state governments which otherwise would have been removed at source by the banks. To be able to offer this option to the states, President Muhammadu Buhari brought the financial muscle of the federal government to bear on behalf of the states guaranteeing the elongation of the loans.
Besides, the availability of the $2.1B from LNG which has now been shared to the states was made possible because President Buhari set a new fiscal standard and tone that all monies generated should go to the federation accounts. Before that constitutional standard was upheld by the president, LNG dividends were going to other NNPC designated accounts.
None of the three parts of this intervention would have been possible without the creativity and approval of President Buhari. It should be noted that the backlog of the salaries in some of the states went back several months before the president took office.
To date, the states have now drawn from the LNG taxes and dividends totaling $2.1B, besides a second sharing from the federation account-ie the regular monthly allocations-a sum of over N518 Billion last week. Finally states have been advised during NEC meetings to take certain steps to avoid a similar financial crisis in the future.
These include: Making the payment of salaries, a first-line charge. Do more to increase their internally generated revenue. Clean-up their payroll to eliminate ghost workers. Have a fully-functional Debt Management Offices.
Senior Special Assistant to the Vice President (Media and Publicity)