Nigeria’s federal government said it will help pay the states’ creditors, including bondholders, despite the finance ministry’s announcement last week to defer their debt obligations for the month of March.
“Debt repayments due to states’ creditors will be fully paid notwithstanding the deferral,” the ministry said in an e-mailed statement on Sunday. “All creditors, including bondholders, will not be adversely impacted.”
Nigeria, Africa’s largest economy and its biggest 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 even pay salaries.
To assist the lower-tier governments, the finance ministry waived 10.9 billion naira ($54.8 million) of loan repayments for March. “Further deferrals will be subject to the agreement of a fiscal restructuring plan to be prepared by each state with clear measurable objectives,” according to the finance ministry.
Nigeria had debt amounting to $10.7 billion as of Dec. 31, of which the states held $3.67 billion, according to data from the country’s Debt Management Office.