Investigations on Monday revealed that some state governors had started visiting the central bank to discuss modalities on how and when the funds would be released. It was gathered that rather than the funds being given in form of a grant, the CBN would release the package to the states as concessionary loans to be repaid over a longer period of time.
The Presidency said the implementation of the three-pronged financial intervention recently approved by President Muhammadu Buhari to support the states to pay their workers was now in progress.
The Senior Special Assistant on Media to the Vice President, Mr. Laolu Akande, said this in a statement.
Akande said state governments would start benefiting from the special intervention fund of between N250bn and N300bn in a matter of weeks.
He explained that planning meetings were currently being held between members of the Federation Account Allocation Committee and the CBN on the one hand, and between the central bank and commercial banks on the other hand.
A top official in the Ministry of Finance confided in one of our correspondents that one of the criteria that might be used for the disbursement of the funds would be for the states to sign Irrevocable Standing Payment Orders guaranteeing the repayment of the loans.
He said while the deductions from the states’ statutory allocations might not be immediate, owing to declining revenue, it would be implemented as soon as the country’s revenue profile improved.
The source said, “This issue of bailout came directly from the Federal Government and it is an issue that must get the support of the CBN and other stakeholders for it to work. You will recall that what necessitated the CBN to intervene was because most states took short-term loans to finance long-term projects as well as service their obligations.
“So, once these loans are restructured, which is what the CBN is currently doing, they will be repaid and the only way that the funds can be recouped is to deduct whatever is their indebtedness as a result of the bailout from their allocations, but this may not be done immediately until revenue improves.”
He also said the CBN would meet with the state governors to encourage them to diversify their internally generated revenues so as to boost their states’ revenue base.
Akande said, “Such meetings are reviewing loan profiles of the states, issues around restructuring of existing loans, including time span, and reconciling the figures. Already, it has been agreed that the existing state loans be restructured for 20 years, and regarding the bond option, the rates to be applied will be market-based but with a cap to make it affordable.
“Within weeks from now, the states are expected to start benefiting from these two other parts of the presidential intervention.”
The CBN Governor, Mr. Godwin Emefiele, had on Friday, when asked about the modalities for the package, said that they were still being worked out.
He said while the funds would be given to the states in form of loans, the bank would meet with the governors and the commercial banks to restructure their expenditure and revenue profiles.
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