President Muhammadu Buhari has approved the suspension of the interest payments on debts owed by state governments as a means of reducing the financial pressure on states.
This was disclosed on Monday by Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, at a press briefing in Abuja. She said it was part of measures to reduce the debt burden on state governments.
The Ministry is expected to meet with the Central Bank of Nigeria (CBN) to work out details of the moratorium according to her.
The moratorium, would be granted on the Federal Government and CBN-funded loans in order to create fiscal space for the states, given the projected shortfalls in FAAC allocations.
Accordingly, as soon as monthly average FAAC receipts fell below a specific threshold, interest and capital payments by states would be suspended till monthly average FAAC receipts exceeded the threshold. The threshold was however not disclosed by the minister.
She said details of this moratorium would be expeditiously worked out with a view to submitting the final proposals for the President’s guidance and final approval.
The minister described the intervention as vital to creating fiscal buffer and said states would be encouraged to explore similar arrangements for their outstanding debts to commercial banks