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| FX Crisis Spurs Nigerian States to Seek $501 Million Loan Repayment Suspension |
As of December 2023, these states hold the highest foreign debt stock, primarily stemming from multilateral and bilateral loans, according to data from the Debt Management Office. Cross Rivers leads with $211.13 million, followed by Ogun with $168.8 million, and Ekiti with $121.1 million
The state governments of Ekiti, Cross River, and Ogun have put forth a proposal to suspend their foreign debt repayments totaling $501 million due to severe foreign exchange volatility. These efforts aim to alleviate the burden of debt service, which state officials argue has significantly hindered their ability to manage existing debts.
As of December 2023, these states hold the highest foreign debt stock, primarily stemming from multilateral and bilateral loans, according to data from the Debt Management Office. Cross Rivers leads with $211.13 million, followed by Ogun with $168.8 million, and Ekiti with $121.1 million.
The commissioners of finance for these states have expressed concerns about the ongoing foreign exchange volatility, which has strained their capacity to repay foreign loans. Additionally, they've raised alarm over reduced allocations from the Federation Account due to debt repayment and deductions.
Akintunde Oyebode, Ekiti State's Commissioner of Finance, highlighted significant increases in deductions from the states' Statutory Revenue for foreign loan repayment, driven by rising exchange rates. He emphasized the need for comprehensive discussions on exchange rates related to multilateral financing.
Furthermore, Oyebode pointed out the impact of savings deductions from monthly revenue, resulting in substantial reductions in Sub-national balances.
Michael Odere, Cross River State's Commissioner of Finance, expressed apprehension about funding capital projects due to dwindling revenues. He suggested suspending certain deductions, especially for multilateral loan repayments, during periods of low distributable revenue.
Dapo Okubadejo, Ogun State's Commissioner of Finance, proposed redirecting the previously earmarked N200 billion in savings back into the federation account for equitable redistribution among the states. He also advocated for an effective system to address foreign exchange volatility associated with multilateral financing.
In summary, these states seek relief from debt repayment obligations to navigate the challenges posed by currency fluctuations and ensure sustainable financial management.
