THE Federal Executive Council (FEC) on Wednesday approved engagement of seven transaction parties for the execution of Promissory Note Programme for the settlement of Inherited Local Debts and Contractual Obligations of the Federal Government in the sums of N689.96 million.
Minister of Finance, Zainab Ahmed who briefed journalists at the end of the weekly FEC meeting said the inherited debt estimated at N3.4 trillion, covered a number of debt owned by the Federal Government to states and other business interests in the country.
She listed the appointed transaction parties as KPMG Professional Services at a cost of N164,657,195.67 million, Zenith Bank Plc And Zenith Capital at a cost of N14,294,331.50 million, Coronation and Access Bank Plc at a cost of N14,294,331.50 million and UBA And United Capital at a cost of N14,294,331.50 million will serve as joint financial advisers while SimmonsCooper Partners got N53,703,771.80 million, Damian Dodo and PartnersN53,703,771.80 million And Perchstone And Graeys-N53,703,771.80 million will serve as joint legal advisers.
The minister said the N3.4 Trillion which would be sourced from the proceeds of FGN Securities Issuance will have the Debt Management Office (DMO) issue appointment letters to the transaction parties as well as execute relevant contracts with the transaction parties on behalf of the government.
It would be recalled that FEC had at its meeting of July 12, 2017 approved the establishment of a Promissory Note Programme for the settlement of inherited local debts and contractual obligations of the Federal Government put at N3.4 Trillion.
In December 2018, NASS had approved the Issuance of Promissory Notes to two creditor categories from the Programme which saw refund made to 25 State Governments for projects executed on behalf of the Federal Government at a cost of N488,743,526,204.77 billion and payment to oil marketing companies (OMCs) for fuel supply accrued interest and foreign exchange differentials at a cost of N348,003,054,975.00 billion.
Breakdown of the estimated debt to be managed by the seven transaction parties in a document obtained from DMO include pension liabilities of N400 billion, unpaid salaries and 3rd party deductions of N24.95billion, staff claims of N270 billion, part of contractors claims ofN45.36 billion and fuel supply accrued interest and foreign exchange differentials of N514.29 billion.
Others are part of state governments claims of N487.85 billion, ministry of health outsourced liabilities of N9.04 billion, major contractors sum of N596.51 billion, export expansion grant (EEG) scheme of N350.12 billion, judgement debt of N112.96 billion, DISCOS debt of N26.71 billion and GENCOS N495.67 billion.
She listed the benefits accrubale from the debt settlement deal to include provision of stimulus to the economy and unlocking of investment across a number of sectors currently having liquidity issues, positive impact on the non-performing loan ratios of banks which will in turn, increase the banks capacity to lend and enable the Federal Government to formally recognise and account for its true liabilities in line with the International Public Sector Accounting Standards (IPSAS).