In the ongoing efforts to address the financial obligations of the Nigerian government, the administration led by President Bola Tinubu is projected to allocate approximately N187.32 billion this year for the settlement of debts owed to local contractors. This revelation emerges from a detailed investigation conducted by The PUNCH, unveiling insights into the financial landscape of the government.
The outstanding debts, categorized as promissory notes, have been documented in a report titled ‘Schedule of promissory notes issued by category as at September 30, 2022,’ meticulously compiled by the Debt Management Office (DMO).
A promissory note, as defined by Investopedia.com, functions as a formal debt instrument that contains a written commitment from one party, the issuer or maker of the note, to remit a specific amount of money to another party, the payee of the note. This financial instrument outlines the obligation to make payment either upon request or at a predetermined future date.
Section 4 of the Government Promissory Notes Act underscores the financial mechanism for settling government promissory notes, stating that these obligations are financed from the federations’ general revenue and assets. It asserts, “The principal sums and interest represented or secured by any government promissory notes are hereby charged upon and shall be payable out of the general revenue and assets of the federation.”
Analysis by Rate Captain has revealed that two promissory notes have been issued to address local contractor debts. The initial issuance transpired on November 23, 2020, followed by a subsequent issuance on July 12, 2021. It has been ascertained that the debt settlement will encompass payments in Nigerian naira, United States dollars, and euros, as indicated in an official document from the Central Bank of Nigeria (CBN).
The financial breakdown of liabilities is as follows: Naira liability amounts to N57.83 billion, dollar liability translates to $26.48 million (equivalent to N19.78 billion), and euro liability stands at €133.76 million (equivalent to N109.71 billion). Both promissory notes are slated for resolution by November 23, 2023.
It is worth noting that a prior report by The PUNCH highlighted the overarching debt situation faced by the Nigerian government in relation to local contractors. The outstanding sum of N11.16 trillion is owed to contractors responsible for the construction of various highways across the nation, as well as certificates of completion.
As President Bola Tinubu’s administration strives to address these financial commitments, the allocation of N187.32 billion towards local contractor debt settlement reflects a concerted effort to manage outstanding obligations and ensure the stability of the nation’s financial landscape.