The Central Bank of Nigeria (CBN) has approved a restructuring of existing bank loans owed by state governments from a short term repayment period of about seven years to up to 20 years, as part of the bailout for financially ailing states.
Bank loans acquired for salary arrears will also be extended to a minimum of 15 and not more than 20 years.
Godwin Emefiele, governor of the CBN announced the apex bank’s restructuring at the National Economic Council (NEC) Meeting.
A four man probe committee which was constituted at the NEC’s inaugural meeting last month, to comb the books of the Nigerian National Petroleum Corporation (NNPC) Excess Crude Account, as well as the Federation Account, failed to submit its report at the meeting which lasted almost five hours.
The NEC also admonished state governors to find ways of reducing their cost of governance.
NEC, which is chaired by the Vice President, consists of governors of the 36 states and Permanent Secretary (or Minister) of the Federal Capital Territory, is the highest economic advisory body to the President on economic affairs of the nation.
The state governors had last month, while seeking for bailouts, tabled some requests before President Muhammadu Buhari, seeking among others, an extension of repayment periods of loans balances owed by states from durations typically between four and seven years to 20 years.
A working document of the NEC obtained by journalists after the meeting, stated that Council received a presentation from the CBN governor on the update of restructuring of bank loans for the states and payment of salary arrears.
Emefiele told the council that following meetings with deposit money banks, it was agreed that existing loans should be restructured for the minimum of 20 years, while salary arrears should also be restructured for the minimum of 15 years and not exceed more than 20 years.
States could take one of two options, the bond option which will attractm market rate; and the debt restructuring option which will attract single digit rate.
Council resolved that a four man team made up of the governor of Bauchi,Rivers, Ondo and Osun states are to follow up with the CBN to ensure that the issues of Excess Crude Collateral for the States are sorted out by next week Tuesday.
NEC was also briefed by the Permanent Secretary Federal Ministry of Finance, Anastasia Daniel-Nwaobia, on the Excess Crude proceeds.
The document said the permanent secretary took the council through the summary of inflow and outflow of Excess Crude Savings account from January 2011 to 21 July 2015.
“According to the Perm Sec, the ECA currently stands at $2.078 billion” it said.
NEC further directed that the Committee on ECA should work with the Accountant-General’s office to resolve the gaps observed in the presentation.
Briefing journalists after the meeting, Lagos state governor Akinwunmi Ambode, alongside governors of Kebbi, Plateau and Enugu states, said NEC also resolved that all states should find ways to reduce their cost of governance.
There is no uniform template on how to reduce the cost of governance but it is expected that states in the specific situations will find different ways and means of ensuring the cost of running governance is
not as huge as it has always been.
“So, it is left for the states in their respective situations to find the different ways of cutting cost but what is important is that we cannot continue with the kind of huge burden or huge cost we are applying to run our government.
“A situation where you are having a huge percentage of your budget as recurrent expenditure is obviously not acceptable. And you must look for ways in reducing the cost of administration in the
various states” Ambode said .
On the submission of the probe report by the four man committee, Ambode said the committee was yet to submit its report, as it was still working on it and “we believe very strongly we will get that report in the next meeting”.
At its inaugural meeting last month, the NEC had set up a four man committee consisting governors of Kaduna, Akwa Ibom, Edo and Gombe states to
comb the books of the NNPC, Excess Crude Account as well as the Federation Account.
Elizabeth Archibong
