Again, states apply for N2.5b domestic loan each from CBN

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Despite the growing debt profiles of many states across the  federation and the fiscal condition of the country itself some state governments are currently applying for another tranche of N2.5b loan each.

They said the loan will be used to augment their healthcare fund in the fight against Covid-19 pandemic.

Meanwhile, it was gathered that for the applications to considered it must fall within the guidelines of the Central Bank of Nigeria, as many states are currently indebted domestically and internationally.

This is coming almost six years after the Federal Government, through the Central Bank,  advanced $2.1b loan to states  to help those in dire financial straits pay salaries and offset contractors’ obligations.

 

“The states requested that the facility be made available to them for their healthcare needs, basically for the purpose of COVID-19,” an official at the DMO, who spoke to Punch on condition of anonymity, as he was not authorised to speak on the matter, said.

 

The official added, “The loan is also like a support and so the states are to get N2.5bn each from the special facility for the support of their healthcare needs.

 

“A good number of states have applied for that and we await till when the request comes from the Ministry of Finance.”

 

The official noted that the borrowing by states must be kept within limits, stressing that the DMO was aware of the $2.1bn loan given to states in 2015.

Recently, the CBN Governor, Godwin Emefiele, while kicking against claims that Nigeria printed N60bn in March, said the apex bank would start deducting the budget support loan it gave to states by May.

Emefiele said, “It is very inappropriate for people to give colouration to printing of money as if it is some foreign words coming from the sky.

 

“It’s important for me to put it this way that in 2015/16, the kind of situation we found ourselves in, we did provide a budget support facility to all the states of this country.

 

“That loan is still unpaid up till now. We are going to insist on them paying back those monies since they are accusing us of giving them loans.”

The DMO official, however, stated yesterday that it was not only states that were borrowing, adding that the current demands for loans must be strictly based on laid-down guidelines.

 

The official said, “It is not only the states that borrow, the Federal Government also borrows, but it must be kept within limits.

 

 

“So the states needed to make the request based on the guidelines of the CBN on borrowing to finance healthcare needs. Some states took advantage of that window to finance their health sector.”

A week ago during while speaking at an event Governor Aminu Tambuwal of Sokoto has appealed to the Central Bank to write off the debt of each state amid growing financial crunch.

 

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