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CBN directs banks to release bailout funds to States

The Central Bank of Nigeria has approved the request of the Deposit Money Banks (DMB) to provide funds to state governments to  pay the backlog of salaries owed their workers. 

CBN said the approval was based on the it’s decision to collaborate with relevant stakeholders to consider ways of liquidating the outstanding staff salaries owed by states and local governments. 

The apex bank stated this in a statement signed by the Director, Corporate Communications, CBN, Mr. Mu’azu Ibrahim.

The statement reads in part, “The Central Bank of Nigeria has approved the request by Deposit Money Banks to provide financial accommodation to State Governments to enable them pay the backlog of salaries of their workers. 

“This is sequel to the decision by the National Executive Council at its meeting of 29th June, 2015, requesting the Central Bank of Nigeria, in collaboration with other stakeholders, to appraise and consider ways of liquidating the outstanding staff salaries owed by State and local Governments. 

“The conditions for accessing the loan facility include resolutions of the State Executive Council authorising the borrowing and State House of Assembly consenting to the loan package, as well as issuance of Irrevocable Standing Payment Order to ensure timely repayment.”

The statement said out of the 27 states involved, funds have been disbursed to two states namely Zamfara and Kwara States that met the requirements as agreed with their respective banks.  

Efforts, it added, would be made in the coming days to conclude disbursements to other states so that all outstanding salaries to civil servants could be cleared.

The CBN approval is coming just three days after the Debt Management Office said the 11 states that had their commercial debt restructured into bonds would be paying an interest rate of 14.83 per cent of the value which their debts to commercial banks were converted into.

The DG, DMO, Dr. Abraham Nwankwo, had stated in Abuja that the 14.83 per cent would be paid by the 11 states whose debt had already been restructured in the first phase of the exercise . 

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