The federal government has disclosed it will commence deduction of the N614 billion bailout loans given to 35 states government with effect from September 2019 allocation.
The Minister for Finance, Zainab Ahmed disclosed this on Tuesday during a Public Consultative Forum on the draft of the 2020 to 2022 Medium term Expenditure Framework in Abuja.
The federal government gave the facility support to the states governments through the Central Bank of Nigeria (CBN) in 2017.
The facility was mean to make the states to meet their financial obligations to civil servants and pensioners when the states purse was under distress.
The money was provided at a 9 percent interest rate, with a grace period of two years.
PREMIUM TIMES learned that some state governors have been seriously lobbying to discharge from the repayment of the loan. The lobby seemed to have hit a brick wall.
The Minister disclosed the repayment module for the effected states will take effect from the next Federation Accounts Allocation Committee ((FAAC) meeting coming up in a fortnight.
She said the refund is not going to be treated as revenue to be used to fund the 2020 budget.
It was a loan that was advanced by the Central Bank of Nigeria to the states, the minister said.
The loan as was issued by the CBN, the recovery process is for the loans to be deducted from the FAAC allocations of the states and remitted back to the CBN.
Fiscal strategy paper (FSP) implementation will be considered during the process ensuring the state remain in the path for fiscal sustainability, the Minister added.
“This will not be a condition for the deduction. We will deduct direct at source and remit to the CBN,” she said.
