The bailout is apparently not for free as earlier thought.
Findings have revealed that the bailout package being prepared by the Central Bank of Nigeria (CBN) for the 36 states of the federation is to be deducted from their statutory allocations.
According to investigations on Monday, it was revealed that some state governors had started visiting the CBN to discuss modalities on how and when the funds would be released.
It was further gathered that rather than giving the money in form of a grant, the CBN would release it to the states as concessionary loans to be repaid over a longer period of time.
The Presidency had earlier said the implementation of the three-pronged financial intervention was in progress.
The statement said state governments would start benefiting from the special intervention fund of between N250 billion and N300 billlion in a matter of weeks.
Meetings are currently being held between members of the Federation Account Allocation Committee and the CBN on one hand, and between the central bank and commercial banks on the other hand.
A source who is a top official in the ministry of finance said 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 that 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 improves.
“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,” the source said.
