Debt: FG Suspends Interest Payments For States

• Debt: FG Suspends Interest Payments For States

The Federal Government has directed the Central Bank of Nigeria to suspend the payment of interest on debts owed by state governments.

Mrs Zainab Ahmed, the Minister of Finance, Budget and National Planning, disclosed this at a press briefing in Abuja on Monday.

According to the minister, this was part of government efforts at reducing the burden on state governments during this period of low FAAC allocations.

Ahmed will now meet with the central bank to work on the modalities of the moratorium.

She said the moratorium would be granted on all the Federal Government and CBN-funded loans to create fiscal space for the states given expected shortfalls in FAAC allocations.

“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 explained.

The minister said the details of the moratorium would be carefully workout before submitting it to the president for final approval.