Ekiti, Cross River, and Ogun states have proposed suspending their foreign debt repayments amounting to $501 million due to significant foreign exchange volatility.
This move aims to alleviate the burden of debt service, which officials claim has severely impacted their ability to meet existing debt obligations.
Saving Point Media looking into the records from the Debt Management Office reports that these states have acquired multilateral and bilateral loans, ranking them among the top 10 states with the highest foreign debt stock as of December 2023.
Cross Rivers leads with $211.13 million, followed by Ogun with $168.8 million and Ekiti with $121.1 million.
These proposals were discussed during the Federal Account Allocation Committee meeting held in March 2024.
During the meeting, Ekiti’s Commissioner of Finance, Akintunde Oyebode, highlighted the strain caused by rising exchange rates on foreign debt servicing costs.
Related News: SERAP Demands Transparency on Loans Obtained by Previous Governments
He advocated for extensive discussions on exchange rates and multilateral financing to address these challenges.
Similarly, Cross River’s Finance Commissioner, Michael Odere, expressed concerns about funding capital projects due to reduced revenues.
He proposed suspending certain deductions, including those for multilateral loan repayments, especially during periods of low distributable revenue.
Dapo Okubadejo, Ogun’s Finance Commissioner, suggested redirecting the N200 billion earmarked as savings back into the federation account for redistribution among the states.
These measures aim to mitigate financial strain and facilitate necessary infrastructural development amidst foreign exchange rate unpredictability.
Responding to these concerns, Finance Minister Olawale Edun, who is also the Chairman of the meeting, emphasized ongoing discussions on economic challenges at the National Economic Council.
He urged states to convey their concerns through their governors for thorough consideration and stressed the need for enhanced cooperation between monetary and fiscal authorities to foster national development.
The total external debt stock of the 36 states and the Federal Capital Territory reached $4.61 billion by December 31, 2023, a slight increase from the previous year.
External debt servicing from states’ allocation amounted to N120.01 billion in 2023 and N30 billion between January and February 2024, reflecting a significant increase from previous years.
You can also read: CBN Bans Use of Foreign Currencies as Collateral for Naira Loans