In an attempt to cut down on the increasing backlog of Nigeria’s internal debt amid falling oil revenues, Nigeria has restructured her short-term commercial bank loans availed to her cash-strapped state governments into long term bonds.
This was made known to 36 State Governors by the Debt Management Office (DMO) Director General, Abraham Nwankwo to the National Economic Council meeting. According to him, the Debt Management Office has issued bonds in respect of the 11 states debts so as to address “fiscal imbalance”. He revealed further that the bonds were issued to 14 commercial banks.
Nwankwo uttered that 22 out of 36 states in Nigeria had applied for a restructuring, and the Debt Management Office had replied by asking them to reconcile their loan figures with the various lenders.
Details on the total value of loans restructured so far, or when they were due for restructuring have not surfaced as bank loans typically mature within two years.
While speaking further Nwankwo said,”DMO is now reviewing the additional submissions by states in the second phase of the program.”
The total debt owed by Nigerian states is in the region of NGN 658 billion ($3.3 billion), a governor present at the meeting revealed. Many of the states took loan in the Nigerian bond market and also, from banks to fund infrastructural developmental projects. But those states have been unable to pay as a result of the decline in price of crude oil, which accounts for 70 percent of the Nigeria’s revenue.