President Muhammadu Buhari has called on state governors to use at least 25 percent of the refunds made to them from excess deductions for external debt service of Nigeria’s Paris Club debt to clear outstanding workers’ entitlements.
A statement by his media aide, Mr. Garba Shehu revealed that the president approved N552.74bn to be paid in batches to all the states, which were entitled to the refund.
They are, however, expected to get 25 percent of their approved sums in the first instance before this week ends. About 33 states are affected.
Shehu said that the refunds arose from claims by the states that they had been overcharged in deductions for external debt service between 1995 and 2002.
He said, in a directive through the Minister of Finance, Mrs. Kemi Adeosun, the president said the issue of workers’ benefits, particularly salaries and pensions, must not be allowed to continue and should be handled with urgency.
The statement read: “When he assumed office last year, the president declared an emergency on unpaid salaries, following the discovery that 27 out of the 36 states had fallen behind in payments to their workers, in some cases for up to a year.
“Following this, a bailout loan was issued to the states twice, with a first batch of about N300 billion given to them in 2015 in the form of soft loans.
“The administration also got the Debt Management Office to restructure their commercial loans of over N660 billion and extended the life span of the loans.
“Because this did not succeed in pulling many of the states out of distress, the federal government this year gave out a further N90 billion to 22 states as yet another bailout under very stringent conditions.
“President Buhari is of the opinion that the payment of salaries and pensions must be given priority to save both serving and retired workers and their families from distress.”
A recent report by BudgIT showed that of the 36 states in the country, only Lagos, Rivers and Enugu, were capable of meeting their obligation to their workers.