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CBN Admits Printing Money for Loan to States to Pay Salaries

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CBN Admits Printing Money for Loan to States to Pay Salaries

There seems to be no end in sight yet to the controversy between Governor Godwin Obaseki of Edo State and the Federal Government over the alleged printing of N60 billion by the government to augment its March monthly allocations to the states and local governments, as Obaseki yesterday dared the Federal Government to face Nigeria’s economic realities and stop its ongoing monetary rascality.

The governor, in his letterheaded paper titled “Our advice is that we stop playing the Ostrich” and made available to newsmen in Benin, said the government should take urgent steps to prevent the economy from total collapse.

“Rather than play the Ostrich, we urge the government to take urgent steps to end the current monetary rascality, so as to prevent the prevailing economic challenge from degenerating further”, he said.

The Edo governor was quoted as saying at the Edo transition committee stakeholders engagement last week that: “When we got FAAC for March, the Federal Government printed additional N50-N60 billion to top-up for us to share.

This April, we will go to Abuja and share. By the end of this year, our total borrowings are going to be within N15-N16 trillion”.

Yesterday’s statement came after the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, told newsmen after the Federal Executive Council meeting in Abuja that what was distributed at the monthly Federation Account Allocation Committee (FAAC) meetings were generated revenue from government institutions available to the public at the ministry’s website.

“The issue that was raised by the Edo State Governor for me is very, very sad. Because it is not a fact. What we distribute at FAAC is a revenue that is generated and in fact distribution revenue is a public information. We publish revenue generated by FIRS, the customs and the NNPC and we distribute at FAAC. So, it is not true to say we printed money to distribute at FAAC, it is not true.

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“So our debt currently at about 23 per cent of GDP and it is at a very sustainable level if you look at all the reports that you see from multilateral institutions,” the minister said. In what may be described as a response to the comment by the Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele, on Thursday, clarified that government’s printing of Naira simply meant loans advanced to States to pay salaries and survive; and not the literal interpretation of printing money from the factory and sharing to the public, wondering why any controversy should be built around it.

Speaking at the end of a facility tour of Dangote Sugar plantation in Awe, Nasarawa State, Emefiele said the apex bank will ensure the full and timely repayment of all facilities extended to states.

He stated that N614 billion budget support facility was extended to the states between 2016 and 2018 to offset backlog of unpaid salaries and other emoluments due to recession occasioned by crude oil slump.

Again, in July 2015, President Muhammadu Buhari approved a robust intervention package of $2.1 billion to assist handicapped states pay salaries.

Emefiele thus described Obaseki’s position on printing about N60 billion to shore up March subvention by the Federal Account Allocation Committee (FAAC) as totally inappropriate.

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He said: “If you understand the concept of printing of money, it’s about lending money. That is our job. To print is about lending money. So, there is no need of putting up controversy about printing money as if we go into the factory, print the naira and start distributing on the streets.

“It’s very inappropriate for people to give colouration to printing money as if it’s some foreign words coming from the sky. So, I think it’s important for me to put it this way that in 2016/16, the kind of situation we found ourselves in, which is even worse than 2015/16, we did provide a budget support facility to all the states of this country. That loan is still unpaid up till now.

“We are going to insist on them paying back those monies since they’re accusing us of giving them loans. Most countries in the world today are confronted not only by the challenges coming from the COVID-19 pandemic, but other issues causing economic crisis and the rest of them.

“What I keep saying is that it will be irresponsible for the CBN or any other federal reserve bank to stand idle and refuse to support its government at this time. And what we are doing here is being done in any clime.