President Muhammadu Buhari has approved the suspension of the payment of interest on debts owed by state governments.
Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, who disclosed this at a press briefing in Abuja on Monday, said this was part of measures to reduce the debt burden on state governments.
The Ministry of Finance, Budget, and National Planning is expected to meet with the Central Bank of Nigeria to work out details of the moratorium.
The moratorium, according to the minister, would be granted on the Federal Government and CBN-funded loans in order to create fiscal space for the states, given the projected shortfalls in FAAC allocations.
Accordingly, she said as soon as monthly average FAAC receipts fell below a specific threshold, interest and capital payments by states would be suspended till monthly average FAAC receipts exceeded the threshold.
She said details of this moratorium would be expeditiously worked out with a view to submitting the final proposals for the President’s guidance and final approval.
The minister described the intervention as vital to creating fiscal said states would be encouraged to explore similar arrangements for their outstanding debts to commercial banks.