A grim picture of the effects of COVID-19 pandemic emerged on Wednesday with indications that about 15 states may not be able to pay salaries to their workers from July.
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The states can however, get a breather, if the Federal Government stops deduction of internal/ domestic loans and refund of other intervention funds from their monthly allocations.
The development has put many governors in panic mode.
At the governors’ request, President Muhammadu Buhari has asked the Minister of Finance, Budget and National Planning, Hajiya Zainab Ahmed, to meet with them on measures to be put in place to save the states.
It was learnt that, despite the withdrawal of $150million from the Sovereign Wealth Fund to augment Federation Account Allocations, states can only be sustained till end of June.
Following the pandemic, oil price fell from $75 per barrel to $16 before regaining composure at $23.
Based on the drastic fall, the Federal Government initially adjusted its 2020 budget benchmark to $30 per barrel but it is now considering a realistic template of $20.
Investigation revealed that as at December 2019, the Debt Management Office (DMO) put the domestic debts of the 36 states and the Federal Capital Territory at N4.106trillion.
About 10 states had accumulated biggest debt profiles of over N100 billion each.
The external and domestic debts of the 10 states were around N2.74 trillion.
While the servicing of external debts cannot be waived, governors are making efforts to prevail on the Federal Government to temporarily stop deduction of some components of domestic debts, especially loans, from monthly allocations from the Federation Account.
The governors have also asked for the suspension of the deduction of the N614billion bailout given to states in 2017.
The Budget Support Facility was given to 35 states following accumulated salaries and their inability to pay. Only Lagos State did not take the facility.
Each of the states is expected to refund N17.5billion
A governor, who spoke in confidence, said: “The governors have met and taken stock of the situation, including the fall in oil price and the effects of the COVID-19 pandemic with attendant lockdown which has crippled economic activities at the state level.
“From the way we are going, about 15 states will not be able to pay salaries as from July.
“We are requesting for the suspension of repayment of some of the facilities given to states. That is the only way we can get a little relief.
“We want to restructure facilities like domestic loans, intervention funds, bailout funds, SUKUK loans and others.”
Chairman of Nigeria Governors’ Forum (NGF), Dr. Kayode Fayemi said: “It is an existential challenge which we are trying to address. We have been exchanging ideas with the Federal Government.
“We have started discussions on how to restructure some of the facilities but we are yet to conclude.”
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