Nigerian states get 360 bln naira from Paris Club refund, excess crude accounts

The disbursement of about 315 billion to Nigerian state government last week from a part of Paris Club debt refund boosted the liquidity in the money market, and pushed down cost of borrowing among commercial lenders.

Also, about 45 billion naira was distributed to the middle-level government from oil savings excess crude account, to strengthen the finance of the state government and help them resolve huge debt overhang holding back development in many of the 36 states and federal capital.
Most of the states have been struggling with workers salary with many in arrears of 10 months or more, setting the stage for industrial crisis ahead of the yuletide.
However, with the fresh cash injection, workers in many of the states are expectant of salary payment and a bounty Christmas celebration this year.
Sources said the government of President Mohammadu Buhari was eager to reduce the pains of the economic recession on the citizen, hence the decision to inject fresh liquidity into the system to boost the finance of state and bring relief to the suffering workforce. 

The reimbursement for the over-deduction on the Paris Club loan was agreed on by the National Economic Council recently.

These debt service deductions are in respect of the Paris Club, London Club and multilateral debts of the Federal Government and the states.

While Nigeria reached a final agreement for debt relief with the Paris Club in October 2005, some states complained that they have been overcharged by the central government.

Meanwhile, Nigeria's overnight lending rate dropped sharply to an average of 3.9 percent on Friday from 10 percent a week ago following the injection of naira liquidity into the banking system.
Traders said the central bank sold around 115.68 billion naira worth of open market operations treasury bills between Wednesday and Thursday, but the market remained sufficiently liquid to keep rates at below double digits.
Lending rates could trade flat this week, traders said, as firms and banks close activities for the end of the year.