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States delaying N338bn bailout – CBN

By on September 4, 2015

The Central Bank of Nigeria has said states yet to receive their shares of the N338bn bailout for the payment of workers’ outstanding salaries are responsible for the delay.

The CBN said it would approve the release of the funds within 24 hours to any state that had fully complied with all necessary conditions for the loan.

It, however, said some of the cash-strapped state governments would be able to access the funds before the end of this week.

The Director, Corporations, CBN, Mr. Ibrahim Mu’azu, confirmed the development to one of our correspondents in a telephone interview.

Mu’azu said, “Actually, the delay has been on the part of the state governments. As soon as they meet the requirements for accessing the loans, the CBN will give approval within 24 hours and they will be able to get the money.

“More states will be able to access this week; a few of them will meet the requirement and get the CBN approval to access the fund this week.”

Out of the 27 state governments that have applied for the funds, only Kwara, Zamfara and Imo states have received the money.

Investigations across the states on Wednesday including Osun and Kogi indicated that the funds were still being expected.

A commissioner in one of the affected states who spoke on condition of anonymity said, “We have not received the money. We are still processing it and we hope it will come soon.”

The Head of Service in Osun State, Mr. Sunday Owoeye said, “The state has not got it. The people should be patient; we are in the process of getting it.”

Mu’azu said the state governments were aware of the basic requirements for accessing the loan.

According to him, a majority of the states are currently working to meet the requirements, adding that as they do so, they will get the central bank’s approval immediately and gain access to the bailout.

Mu’azu had last week said that the approval for the bailout was based on the CBN’s decision to collaborate with relevant stakeholders to consider ways of liquidating the outstanding staff salaries owed by state and local governments.

Other conditions for accessing the loans are a resolution of the State Executive Council authorising the borrowing; and the state House of Assembly consenting to the loan package.

There is a need for the issuance of an irrevocable standing payment order to ensure timely repayment of the loan.

The funds were disbursed to the states that had complied with the requirements as agreed with their respective banks.

The release followed the restructuring of their debts into bonds by the Debt Management Office at an interest rate of 14.83 per cent of the value.

The Director-General, DMO, Dr. Abraham Nwankwo, had said in Abuja that the 14.83 per cent would be paid by the 11 states whose debts had already been restructured in the first phase of the exercise.

The restructuring, he said, had been effected, noting that with the arrangement, the bond already issued would mature on July 18, 2034.

The first 11 states that got their debts to commercial banks restructured are Osun, N88.6bn; Delta, N69.8bn; Ogun, N55.4bn; Imo, N37.1bn; Ekiti, N18.8bn; Kwara, N15.6bn; and Edo, N11.9bn.

Others are Benue, N10.9bn; Oyo, N9.1bn; Bauchi, N6.5bn and Kogi, N0.81bn.