The Federal Government has set aside N16.1 billion monthly for the settlement of N1 trillion debts owed by state governments.
The money, which is in the form of debt swap, will be paid over eight years to resolve the debts incurred by states from bailout facilities.
This initiative represents a structured approach to mitigate states’ financial burdens, with payments corresponding to previous Federal Government withdrawals from the Excess Crude Account (ECA).
This was according to the minutes of the January 2024 meeting of the Federal Account Allocation Committee (FAAC), which was later presented and adopted during the following month’s meeting at the Main Auditorium of the Federal Ministry of Finance Headquarters on February 22, 2024. A copy of the minutes was seen by Naijaonpoint.
The strategic move can be traced to the previous finance minister’s term, who had instituted a committee involving the Federal Ministry of Finance, Accountant-General of the Federation (OAGF), Nigeria Governors’ Forum (NGF), among others, with the goal of reconciling withdrawals amounting to N3.9 trillion from the ECA.
The outcome revealed an outstanding N1 trillion in favour of the states (N1 trillion withdrawn by the Federal Government), hence the establishment of the current monthly deduction strategy from the Federal Government’s FAAC allocations.
Under this setup, the Federal Government will assume the monthly financial obligations initially intended for banks, liberating the states from these specific debt repayments.
During the deliberations, there was a notable diversity in viewpoints. While some state commissioners of finance lean towards the idea of being presented with options between debt swap and promissory notes, others acknowledge the potential financial relief the swap could bring.
The document read:
It added:
The Acting Chairman of the meeting and Accountant-General of the Federation (AGF), Mrs Oluwatoyin S. Madein, stressed that the FAAC did not make the decision to implement the debt swap but was a consensus among the governors. It was advised that any objections or considerations should be directed through the appropriate channels for resolution at the Governors’ level.