Succour may have come the way of contractors, pensioners and oil marketers as the Federal Government has approved N2.7 trillion for payment of outstanding debts, which it owed for over 20 years.
The beneficiaries, as confirmed by government, will be settled through the issuance of liquid promissory notes (10-year tenure) phased over a three-year period to minimise impact on liquidity and with preference given to those willing to offer the largest discounts.
Government said some of the obligations dated as far back as 1994 and that its resolution will significantly enhance liquidity in critical sectors of the economy.
The Federal Government said after reconciliation by the committee set up to look into the indebtedness, it was able to provisionally confirm a discounted total of N2.7 trillion obligations, consisting of N740 billion of outstanding pensions and promotional salary arrears (not discounted) and N1.93 trillion (discounted) of other obligations, including dues to Federal Government contractors and suppliers.
This is even as the Acting President, Prof. Yemi Osinbajo, at the Federal Executive Council, FEC, yesterday, directed the Minister of Finance, Mrs Kemi Adeosun, to release N1.6 billion for 16 states ravaged by floods across the country.
The move, according to Special Adviser to the President on Media and Publicity, Mr Femi Adesina, was to help cushion the effects of the disaster on Nigerians.
Adesina, while briefing the State House Correspondents shortly after the FEC meeting presided over by the Acting President, said the money would be taken from the Federal Government’s Ecological Account in the Central Bank of Nigeria,CBN.
He said the Minister of Finance had been directed to release the money to the National Emergency Management Agency, NEMA, for onward distribution to affected states, including Ekiti, Kwara, Lagos, Bayelsa, Enugu, among others.
On N2.7trn for contractors, pensioners, oil marketers
Disclosing the approval of the N2.7 trillion, Minister of Finance, Mrs. Kemi Adeosun, said: “The Federal Executive Council today (yesterday) approved the Ministry of Finance’s proposed validation process and promissory note and debt issuance programme to resolve a number of inherited and long outstanding Federal Government obligations to contractors, state governments and employees.
‘’This will be followed by a request to the National Assembly to approve the programme ahead of implementation.
“In March 2017, the Economic Management Team, under the leadership of His Excellency, Acting President Yemi Osinbajo, mandated the Minister of Finance to chair a committee that would establish a process to confirm the validity of inherited Federal Government obligations, and propose a mechanism to resolve them.
“These obligations largely consist of dues owed state governments, oil marketers, power generation and distribution companies, suppliers and contractors by Federal Government parastatals and agencies, payments due under the Export Expansion Grant, EEG, outstanding judgement balances as well as pension and other benefits to Federal Government employees.
“Some of the obligations date back as far as 1994. The resolution of this will significantly enhance liquidity in critical sectors of the economy.”
“Following an exhaustive process of reconciliation, the committee has been able to provisionally confirm a discounted total of N2.7 trillion of obligations, consisting of N740 billion of outstanding pensions and promotional salary arrears (not discounted) and N1.93 trillion (discounted) of other obligations including dues to Federal Government contractors and suppliers.
“These numbers are aligned with existing Federal Government estimates, and in some cases, are lower than previously estimated.
“The supplier and contractor obligations will be resolved through a strict process of final validation, following which those confirmed will be settled through the issuance of liquid promissory notes (ten-year tenure) phased over a three-year period to minimise impact on liquidity and with preference given to those willing to offer the largest discounts.
“Obligations owed to individuals (for example pensions and employee benefits) will be resolved through the issuance of specific bond instruments, again phased over the next three years.
‘’These obligations will then be incorporated into the Medium- Term Expenditure Framework by the Ministry of Budget and National Planning. We cannot get our economy moving at the pace we need to if we do not address the legacy issues we have inherited, which act as a significant drag on economic activity.
“The Government must be a driver of growth, and enable private sector activity. It should not be the most significant obligor to many value creating businesses. At the same time, we have an obligation to our Federal Government employees to address these long-outstanding pension and employment benefit issues.
“We are doing this systematically, and we want to do so once and for all. We are enhancing the government’s controls and processes to ensure we do not find ourselves in this situation again.”
Giving details of the efforts of the Committee in resolving legacy Federal Government obligations, Adeosun said the committee which was established at the request of the Economic Management Team, in March 2017, included representatives of the Ministry of Justice, Ministry of Budget and National Planning, Ministry of Power Works and Housing, Ministry of Trade Industry and Investment.
Others are Office of the Head of Service, Debt Management Office, Office of the Accountant General of the Federation, Nigerian Customs Service, Central Bank of Nigeria and Nigeria Export Promotion Council.”
On the release of N1.6 billion to the 16 states ravaged by flood, Presidential spokesman, Femi Adesina, while briefing the State House Correspondents shortly after the FEC meeting presided over by the Acting President, said the money would be taken from the Federal Government’s Ecological Account in the Central Bank of Nigeria,CBN.
He said the Minister of Finance had been directed to release the money to the National Emergency Management Agency, NEMA, for onward distribution to affected states, including Ekiti, Kwara, Lagos, Bayelsa, Enugu, among others.
