Thirty-one state governments owe the Central Bank of Nigeria, CBN, a total of N339.9bn obtained to pay workers’ salaries between 2015 and 2023, a document obtained from the apex bank has revealed.
The document also stated that the sub-nationals had yet to pay an outstanding of N339.97bn and a loan default of N1.31bn as of September 2023.
The fund, which was facilitated through the Salary Bailout Facility, a strategic intervention by the CBN aimed at alleviating the fiscal pressures faced by the states, was part of the over N10.3tn intervention fund made available by the apex bank under the immediate former CBN governor, Godwin Emefiele.
In contrast, the current governor, Olayemi Cardoso, stopped the programme, stressing that the apex bank could not continue to fund more intervention programmes amidst the current economic crisis.
The CBN said the SBF was designed to help the state governments to clear the backlog of salaries owed their employees. The initiative underscores the critical role of the CBN in stabilising the country’s financial landscape, especially in times of fiscal distress faced by state administrations.
The programme, which has been closed according to its status report, involved key stakeholders, such as the benefiting state governments, Deposit Money Banks, the Federal Ministry of Finance, and the Accountant-General of the Federation, all of whom played pivotal roles in implementing and managing the bailout package.
A breakdown of the report showed that 31 state governments benefited from the initiative, with N457.17bn disbursed. Despite the substantial disbursement, the principal repayment made so far totalled N117.21bn, with interest repayments at N45.21bn.
The government needs to be selfless enough to tackle the debt situation of the country.”
An economist at Lotus Beta Analytics, Shedrach Israel, said Nigeria’s high debt profile gave the impression that the country could not sustain itself. He also called on the government to tackle the recurring debts.
He said, “It is shocking to know that we are still borrowing as a nation because petrol subsidy removal is meant to provide more revenue to the government. The government is already doing a lot to restructure the tax system, so there are enough sources of income. The implication of borrowing more cannot be over-emphasized. It’s reducing the country’s revenue for capital infrastructure. Borrowing gives a false sense of liquidity. It is like eating the future today and bearing the consequences later.
“Borrowing gives the impression that the economy is not viable and cannot survive outside of borrowing.
“For every money that’s borrowed, there are budgetary allocations because the loans cannot be paid within a short time. The amount spent on debt servicing is almost more than the budgets of some ministries, departments, and agencies of the Federal Government.
“The government has to put an end to borrowing, especially borrowing without public knowledge.”
