President Muhammadu Buhari has approved the suspension of a monthly deduction at source of salary assistance loans given to struggling Nigerian States that have been finding it hard to pay salaries, the office of the Vice President said in a statement, following the National Economic Council chaired by Vice President Yemi Osinbajo on Thursday.
Last year, a bailout was given to States that could not pay salaries, and their Federal Allocations were being deducted every month to repay the loans.
Mr. Osinbajo’s spokesman, Mr. Laolu Akande, quoted the Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, as reporting to the Council that so far a total of N689.5 billion has been disbursed as salary assistance loans to States and an additional N310 billion disbursed as Excess Crude Account-backed loans to States, bringing the total to almost a trillion naira in 10 months.
But even with a trillion naira loans, States still find it hard to pay salaries, which has now compelled Buhari to suspend the monthly deduction of the loans repayment from their monthly allocations.
As a result, no such deductions would be made this month from the FAAC allocations to the States, the Council was told by the Minister of Finance.
“The Vice President, Prof. Osinbajo added that the President will continue to review the situation of the States on an ongoing basis and take appropriate relief measures as necessary and possible,” Mr. Akande said.
The move is meant by the President to give the States some financial relief at a time the FAAC allocations are dwindling due to the drop in oil prices, the Minister of Finance told the Council.