The 36 states of the federation and FCT have already shared a total of 2.1 billion dollars being money released to them from the Nigeria Liquified Natural Gas (NLNG) dividends and taxes and will soon collect the N300 billion CBN intervention funds meant for them.
A statement issued by the Senior Special Assistant to the Vice President on Media and Publicity, Mr Laolu Akande, on Monday in Abuja, said that the government’s decision was in line with the implementation of the three-pronged financial intervention of President Muhammadu Buhari to states .
It said that, in line with the three-pronged formula, planning meetings were 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.
Akande explained that the meetings were to determine the details of the special intervention, debt relief programme of the President for the states, loan profiles of states, issues around restructuring of existing loans including time span, and reconciling the figures.
The statement reads: “Already, it has been agreed that existing state loans be restructured for 20 years, and regarding the bond option, the rates to be applied will be market-based but with a cap to make it affordable.
“Within weeks from now, the states are expected to start benefiting from two other parts of the presidential intervention.”
Specifically, the first part of the intervention was the sharing of about 2.1 billion dollars in fresh allocation between the states and the Federal Government, while the second part involves a Central Bank of Nigeria-packaged special intervention fund of between N250 billion and N300 billion that will be offered to the states as soft loan.
The third stage is a debt relief by the CBN and Debt Management Office, which will help states to convert their commercial bank loans into bonds and restructuring such loans by extending their life span, thereby reducing the debt-servicing expenditure.
The statement also recalled that during the last National Economic Council meeting, the states were advised to take certain steps to avert similar financial crisis in future.
These steps include making the payment of salaries a first-line charge; increasing their internally-generated revenue; cleaning up their payroll to eliminate “ghost workers’’ and opening fully-functional Debt Management Offices, the statement added.