The National Economic Council (NEC) meeting on Thursday suspended further deduction of state governments’ loans from their accounts maintained in the Federation Account. This will come as a relief for several states which barely have enough to pay salaries of workers after deductions have been made at source.
Many of the states have taken loans which are repaid through monthly deductions from funds accruing to them in the Federation Account.
The Minister of Finance, Kemi Adeosun, said state governments’ loan repayment to the Federation Account was deferred to allow states have enough money in their coffers to pay workers salaries and meet other obligations in their states.
She spoke with State House correspondents at the end of the NEC meeting chaired by Vice President Yemi Osinbajo at the Presidential Villa, Abuja.
According to her, the current economic situation in the country necessitated the deferral of the loans repayment.
She said: “On the update of the financial situation of the states, it was discussed extensively that currently the federation account receipt are among the lowest that has been seen in recent memory. We are looking at N299 billion this month and that is because of the very low oil prices that was recorded in January and February.
“If you remember oil prices went as low as $28 and $31 per barrel and of course that has led to a very low federation account as a result of this, I approached the President and the governors that we defer the loan deductions from the federation account entitlement.
“The aim of this is to ensure that we support the state governments throughout this difficult period in order for them to meet salary obligations. The government is very committed to stimulating the economy and recognizes that ability of states to meet salary obligations is a very crucial in getting the economy moving again.”
So far, the federal government has disbursed the sum of N689.5 billion as salary assistance loan to States and an additional N310 billion disbursed as Excess Crude Account-backed loans to States.