FEC approves N2.7 trillion to settle Nigerian govt debts to contractors, pensioners, others

FROM LEFT: National Security Adviser, retired Brig.-Gen Babagana  Mongulu; Head of Civil Service of the 
Federation, Mrs Winifred Oyo-Ita and Acting President Yemi Osinbajo at the Federal Executive Council Meeting at the 

Presidential Villa Abuja on Wednesday (12/7/17)
03468/12/7/2017/Callistus Ewelike/NAN
FROM LEFT: National Security Adviser, retired Brig.-Gen Babagana Mongulu; Head of Civil Service of the Federation, Mrs Winifred Oyo-Ita and Acting President Yemi Osinbajo at the Federal Executive Council Meeting at the Presidential Villa Abuja on Wednesday (12/7/17) 03468/12/7/2017/Callistus Ewelike/NAN

The Federal Executive Council, FEC, has approved N2.7 trillion for payment of the federal government’s discounted obligations.

The money consists of N740 billion of outstanding pensions and promotional salary arrears (not discounted) and N1.93 trillion (discounted) of other obligations including dues to federal government contractors and suppliers.

This was revealed on Wednesday by the Minister of Finance, Kemi Adeosun, while briefing State House correspondents after the meeting of the council at the Presidential Villa, Abuja.

Mrs. Adeosun said the obligations accumulated over the last two decades and will be paid through bonds and promissory note issuance to resolve long outstanding dues and to also stimulate economic activity.

The spokesperson for the ministry, Salisu Danbatta, in a background note said the debt issuance programme is to resolve a number of inherited and long outstanding federal government obligations to contractors, state governments and employees.

“This will be followed by a request to the National Assembly to approve the programme ahead of implementation,” he said.

Earlier in March, the Economic Management Team, EMT under the leadership of Acting President Yemi Osinbajo, had mandated the Minister of Finance to head a committee that would establish a process to confirm the validity of inherited federal government obligations, and propose a mechanism to resolve them.

These obligations consist of dues owed to state governments, oil marketers, power generation and distribution companies, suppliers and contractors to federal government parastatals and agencies, payments due under the Export Expansion Grant, EEG, outstanding judgement balances as well as pension and other benefits to federal government employees.

“Some of the obligations date back as far as 1994. The resolution of this will significantly enhance liquidity in critical sectors of the economy,” he said.

He said the supplier and contractor obligations will be resolved through a strict process of final validation, following which those confirmed will be settled through the issuance of liquid promissory notes (ten-year tenure) phased over a three-year period to minimise impact on liquidity and with preference given to those willing to offer the largest discounts.

“Obligations owed to individuals (for example pensions and employee benefits) will be resolved through the issuance of specific bond instruments, again phased over the next 3 years.

These obligations will then be incorporated into the Medium Term Expenditure Framework, MTEF, by the Ministry of Budget and National Planning.”

During the briefing, Mrs. Adeosun said certain ‘legacy issues’ ought to be addressed to get the economy back on track.

“The government must be a driver of growth, and enable private sector activity. It should not be the most significant obligor to many value creating businesses.

At the same time, we have an obligation to our federal government employees to address these long-outstanding pension and employment benefit issues. We are doing this systematically, and we want to do so once and for all.

“We are enhancing the government’s controls and processes to ensure we do not find ourselves in this situation again. Over the last two decades the federal government has built up over N2.7 trillion of obligations which were not cash backed, and remain outstanding to this day.

We have developed a solution that will simultaneously resolve these issues, and deliver a boost to economic performance.

“Our solution will remove the drag on economic performance these obligations cause, improve liquidity in key sectors, especially the power sector where we will resolve FG dues to the distribution and generation companies, and so boost investor confidence.

It will also help to improve non-performing loan ratios in the banking sector, where an unacceptable number of NPL’s are linked to government contracts,” she noted.


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  • Opekete

    This is an intelligent way to address the backlog of federal pension owed to retirees. Issuance of tenured bonds which could be converted to cash at a discounted rate through the financial institutions will add liquidity confidence to the retired people.

    • emmanuel

      This was a blue print proposed by the construction companies early in 2016, but Kemi commited to work towrds implemetation, only for her to bol away without action.
      She is now making it look like it was her babay

      • absam777

        You talk lots of trash. If she does not implement it of what use is the proposal? Think with your head and not your ass.

  • TrueFairGame

    This is not a bad move theoretically. I pray it is implemented with diligence and sincerity of purpose. At least the state has started technical thinking. Altho some mistakes will be made along the line but it is better to face it head on, learn from the mistakes and move on

  • Abdullah Musa

    This might be the most significant achievement of this administration: government that meets its contractual obligations.

  • ukoette ibekwe

    Another gimmick by the party of gimmickry.

    • Abdul

      Bad belle go away from here. Enemy of good news.

  • Rommel

    Still people say this administration is under performing, well, what do we even expect from people drunk on petro dollars, I keep hearing economy was this and that under the Jonathan administration yet no one can mention or point to any significant addition to the economy from the administration that received more financial inflows from high crude oil prices (highest ever in history) than all previous administrations combined, long live to all citizens who wish Nigeria well and Kudos to the Buhari/Osinbajo administration

    • emmanuel

      Broken brain, Nigeria economic fundamentals were always in the positive, in the region of AAA+, BBB+ etc.
      World Bank growth indices were usually 100% higher than target.
      Can you compare those days with the evil days you now praise, with a depressed economy?
      Meanwhile, believe Kemi; believe the devil. The next moment, she tells the world that Nigeria will no more borrow to fund her budget. Meanwhile over 31% of the budget was to be financed by load.
      Such news makes sense to only dullards

    • whereto

      Very good initiative. This govt is displaying strong financial discipline which will fundamentally strengthen the economy. The challenge is to will take some time to feel the benefits and we are a people who expect miracles.

  • Tanimu

    PDP has jolted them back into reality!

    • Ajayi Ifayemi

      How, by getting a judgement from the courts. Please give me a break. Their problems are far from over. All of Nigerian parties are the same when it comes to the way they play politics. They cannot get along with each other because one person or the other is always scheming.

  • DonMe$$i

    REPORTER: Was the inauguration of the two ministers part of the discussion?

    OSINBAJO: No. We didn’t discuss inauguration or anything like that. We didn’t.

    REPORTER: When will the ministers-designate be inaugurated?

    OSINBAJO: Well, I’m not in a position to say anything. I don’t have a date in mind but I’m sure very very soon, we will do that.

    And the buhari worshippers say there is no difference between ‘coordinator’ and ‘acting president’??


    • Mufu Ola

      Why do u stop your Ahahah……?

      • emmanuel

        Same character as counsellor. Shameless low life. Local man who come to public space with very low exposure and learning.

  • emmanuel

    On Tuesday, Kemi said there will not be any more borrowing to financing the budget, then on Wednesday at FEC, she said Nigeria is issuing bonds of N2.7 trillion to finance the budget.
    I suspect she does not know that issuing bonds, to pay bills is borrowing?
    Kemi is to naive to be a Finance Minister.
    I feel very ashamed when the Yorubas style themselves as the most sophisticated people in Nigeria, yet they keep churning out mediocres as their stars.
    There is a bearded man who is communication minister. I suspect he is in a health bay with Buhari or in Saudi Arabia throwing stones at the devil.
    Yorubas you can do better going forward, do not allow gangsters nominate your leaders for you. Also imagine that there is a Deputy Speaker of NASS that nobody in Nigeria knows. I cannot identify that man if he comes to the Television today, but recalled Emeka Ihedioha as the last Deputy Speaker and others before him were vibrant.

  • Justice Equity

    Nobody still remembered buharis China perambulation where Nigerians where held spell bound by an axis of evil whose lying tendencies makes even the devil looks like a saint,no body remembered the lies that buhari have recovered $2trillion dollars in the lying gospel according to the AGF malami,no body remembered that magu have recovered $650b according to the gospel of the former SGF the shameless pastor grass cutter,no body remembered buharis lies during 2015 elections when he lied that he shall effectively secure Nigeria, provide employments to 5m Nigeria, provide power 24/7 and develop Nigeria, nobody remembered buharis lying tendencies when he said that he was not sick and that he was fit as a fiddle and that he can take on usain bolt in a 200m dash.
    APC and her government are lying machines whose words are not even fit for a dust bin.