Federal Executive Council approves IOUs to clear N740.75bn local debts
The
Federal Executive Council has approved the issuance of promissory notes for the
settlement of debts owed local contractors worth N740 billion.
The
Minister of Finance, Kemi Adeosun, gave the hint at a briefing after the FEC
meeting adding that debts to GENCOS, DISCOS and state government was
N193.69billion.
She said
the Memorandum that the Council approved was for the issuance of a promissory
note programme to settle inherited debts to local contractors and state
governments on the part of federal government
The
Minister noted that the obligations were a drag on the economy because many of
the contractors owed the banks which in turn had non-performing loans.
She
said that the promissory notes had liquidity status meaning that the banks
could accept them from the contractors and trade them to improve the banks’
non-performing loans.
She
said that because of the government debts there was illiquidity in such places
as the power sector, which had reversal of tariff, which led to a debt to
GENCOS of about N495 billion.
She
said that the debt had held back investments in the power sector.
The
minister said the government decided to draw a line on the inherited
obligations and issue non-interest IOUs and expecting those owed to negotiate
what should be paid to them at great discount.
She
also said a very rigorous process was put in place to validate claims adding
that a firm was engaged to do the validation.
Adeosun
said government had also directed that agencies fed back their indebtedness
every quarter to avoid a repeat of the indebtedness.
The
minister noted that contractors abandoned sites due to the debts and that
government wanted them to return.
She
also said that government intended to expand export trade with the payment of
the export grants.
She
further said it was expected that the non-performing loans in the banks would
improve.
The
Minister also said that government had identified that promotion arrears to
civil servants had not been paid for long and planed clear the debt over a
three year period.
Also,
the Head of the Civil Service of the Federation, Winifred Oyo-Ita, said that
FEC approved the 2017 to 2020 strategy and implementation plan for the
transformation of the civil service.
She
said that it had a strategic implementation work plan which identified the key
actors and budget as well as the training and manpower development of workers.
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