President Muhammadu Buhari has come to the rescue of Nigerian state governments, as he approved the suspension of deductions of loans and bailout funds from their shrinking monthly allocation.
Buhari had last year approved a 30-year repayment for states over bailout funds granted them in 2016.
With the coronavirus pandemic cratering Nigeria’s revenue, many of the states will predictably find it impossible to pay their workers’ salaries from June.
At least two of the states, Ekiti and Kano have cut the salaries of political appointees by 50 percent. Others are expected to follow suit.
The Federal Government on its own has also imposed some belt-tightening, slashing budget 2020, in the first instance.
The budget was based on an oil benchmark prize of $57. Oil is now trading for about $30 per barrel.
According to The Nation, Buhari acceded to the request of the governors to suspend the deductions for one year.
Chairman of the NGF, Ekiti State Governor Kayode Fayemi confirmed the story: “It is true that the President has approved the suspension of these obligations for one year.”
The states are hoping the moratorium will enable them to 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.
Indications of financial crisis emerged in the April sharing of Federally collected revenue. All major indices tanked.
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.
The Gross Revenue available from the VAT for April 2020 was N94.495 billion as against the N120.268 billion distributed in the preceding month of March, resulting in a decrease of N25.772 billion.
The Petroleum Profit Tax, Companies Income Tax, Import and Export Duties, Oil and VAT, all recorded a decrease.