State governments can now heave a sigh of relief following President Muhammadu Buhari’s directive suspending further deductions of loans and bailout funds from their monthly allocation.
The Coronavirus pandemic has virtually destroyed the world’s economy – draining Nigeria’s oil revenue to the bottom.
The Federation Account projected revenue has dropped by more than half, a situation that will make it impossible for states to meet up with their obligations, including payment of workers’ salaries from next month.
The Federal government has slashed Budget 2020 as a result of the economy crunch. Many states have also downgraded their financial projections.
It was learnt that the President acceded to the request by the governors to suspend the deductions for one year. This will enable them cope with the financial challenges posed by COVID-19.
Each State will, however, go to its lenders to renegotiate the interest rates on their credit facilities.
The Federal government adjusted its 2020 budget benchmark from $57 to $30 per barrel.
It is further considering a realistic template of $20 per barrel.
Although N606.196billion was available as Federation Account allocation for April, the distributed Statutory Revenue of N370.411billion received for the month was lower than the N597.676 billion for the previous month by N227.265 billion.
A source reportedly said: “After series of talks between Nigeria Governors’ Forum (NGF), the Minister of Finance, Budget and National Planning, Hajiya Zainab Ahmed and other relevant agencies, it was agreed that the suspension of payment of all debt obligations will serve as a breather for states and the FCT.
- Media Report