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States must start paying $2.1b budget support loan, says CBN

Governor Godwin Emefiele, the Central Bank of Nigeria (CBN) on Thursday stated that state governments must begin to pay back the Budget Support Loans given to them by the Federal Government.

This statement was made by the CBN governor while reacting to claims by Edo State Governor Godwin Obaseki that the Federal Government printed money to augment the March revenue shared by the Federation Account Allocation Committee (FAAC).

Obaseki alleged that the Federal Government is borrowing without a sustainable plan to sort out the debt load.

The Minister of Finance, Zainab Ahmed on Wednesday described Obaseki’s claims as “sad” and “untrue”

The Edo Governor, Obaseki countered the comments of the finance minister, saying she should rather “rally Nigerians to stem the obvious fiscal slide facing our country”.

He added: “Rather than play the Ostrich”, the government should “take urgent steps to end the current monetary rascality, so as to prevent the prevailing economic challenge from degenerating further.”

Obaseki added: “it is imperative to approach the Nigerian project with all sense of responsibility and commitment and not play to the gallery because ultimately, time shall be the judge of us all.”

Emefiele explained that the apex bank’s interventions are meant to address the grim economic outlook because “Nigeria is unfortunately in a very bad situation,” He added: “If you understand the concept of printing of money, it is about lending money”.

“That is our job. To print is about lending money. So, there is no need of putting all the controversy about printing of money as if we go into the factory, print the naira and start distributing on the streets.

“It’s very inappropriate for people to give colouration to printing of money as if it’s some foreign words coming from the sky”.

Giving further clarification, Emefiele said “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’re accusing us of giving them loans”.

In July 2015, President Muhammadu Buhari approved $2.1billion as intervention package to help bankrupt states pay salaries and offset contractors obligations. Government revenue had dropped at the time because of the fall in the price of oil.

Defending government’s action, Emefiele said “most countries in the world today are confronted not only by the challenges coming from the COVID-19 pandemic causing economic crisis and the rest of them.

“What I keep saying is that it will be irresponsible for the CBN or any other federal reserve to stand idle and refuse to support its government at this time and what we are doing here is being done in other  climes.

“At the last MPC meeting, I gave data on what is being done in other climes to shore up their economy and take them out of recession.

“I’m not going to pretend about it. We are facing a problem about productivity output which is GDP. Luckily, we managed to exit from recession, now we are looking at how to get our head above the water”.

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