The federal government says only N2 billion has been released from the N5 billion loan it offered to each state as a palliative to cushion the impact of the petrol subsidy removal. Wale Edun, minister of finance and coordinating minister of the economy, spoke on Friday during a press conference in Abuja.
In August, the federal government announced a N5 billion palliative package for each state of the federation, including the federal capital territory (FCT), to cushion the impact of the removal of the petrol subsidy. Babagana Zulum, governor of Borno, had said the palliative would enable state governments to procure 100,000 bags of rice, 40,000 bags of maize and fertilizers, to cushion the effect of food shortage across the country. At the press briefing, Edun said the government is aware of the potential negative consequences of releasing all of the palliative funds at once, “so it decided to release them gradually”. “On the issue of the 5 billion, it is a combination of grants from the federal government and borrowing by the states,” the minister said.
“And of course, although the sum of 5 billion is earmarked, you will agree with me that to release such funds across all the states all at once will be self-defeating because it will lead to an inflationary spiral. It will lead to the cost of goods being sold going up and it will affect the exchange rate. “And so, it is N2 billion that has been released as an initial intervention and FCT will be included is the information that I have.” FG PLEDGES OF EFFECTIVE DEBT MANAGEMENT, BORROWING TO BE ‘LINKED TO RETURN ON INVESTMENT’ Edun also said the government would effectively manage debt, assuring that borrowings will be “linked to return on investment”, under the current administration. The minister said the current administration intends to increase revenue.