The Nigerian Governors Forum (NGF) has in like manner urged the Central Bank of Nigeria (CBN) to suspend all funds deductions from states and restructure their debt repayments.
Governor Kayode Fayemi of Ekiti, the NGF chairman, said this at the governors’ second COVID-19 teleconference meeting on Wednesday.
The details of the meeting were made available via a copy of the communique on Thursday.
The NGF had on Monday resolved to hold their weekly meetings via teleconferencing as part of the efforts to check the spread of COVID-19 in the country.
The forum said the request to the CBN was agreed on after a briefing it held with the Minister of Finance, Budget and National Planning, Zainab Ahmed.
Mr Fayemi said such measures would help safeguard the liquidity of state governments and mitigate the economic impact of the COVID-19 pandemic ravaging the economy.
“Following a briefing from the Minister of Finance, Budget and National Planning on fiscal measures taken by the federal government to mitigate the economic impact of the COVID-19 pandemic, the Forum called for urgent fiscal measures to safeguard the liquidity of state governments, including the acceleration of an arrangement to suspend all state deductions and restructure all debt service payments on federal government and CBN-owned debts,” the NGF said.
“The federal government usually guarantees those loans, that is why the repayment of those loans are placed on first-line charge, once statutory monthly allocation is due to those states. There are usually terms of deduction; it is the duty of the Accountant-General of the Federation and the minister of finance to deduct the loans that they have guaranteed.
“For example, if they (states) are to be paid a certain allocation per month once allocation comes in they deduct it at first before they release the balance to the states,”. Mr Effiong said.
Data from the Federation Account Allocation Committee shows that Nigeria’s 36 state governments spent ₦3.6 billion servicing their external debt obligations in January.
The amount represents about 1.8 per cent of the state governments’ net statutory January allocation of ₦206.75 billion.