Nigeria’s federal government said it will help pay states’ creditors, including bondholders, despite the finance ministry’s announcement last week that it will defer their debt obligations for the month of March as the regions struggle to pay civil servants.
“Debt repayments due to states’ creditors will be fully paid notwithstanding the deferral,” the ministry said in an e-mailed statement on Monday. “All creditors, including bondholders, will not be adversely impacted.”
Nigeria, Africa’s largest economy and oil producer, has been hammered by tumbling oil prices. Economic growth slowed to 2.8 percent in 2015, the lowest since 1999. The International Monetary Fund forecasts growth in 2016 might recede to 2.3 percent. The nation’s revenue fell to five year low in March, shrinking disbursements to its 36 states, and making it difficult for them to pay government salaries.
To assist the lower-tier governments, the finance ministry waived 10.9 billion naira ($54.8 million) of loan repayments for March. Read more