ABUJA, July 12 – Nigeria plans to issue a 10-year promissory note to offset 2.7 trillion naira ($8.85 billion) owed to government contractors and employees, the finance minister said on Wednesday.
Nigeria, Africa’s biggest economy, is in the second year of a recession caused by low crude oil prices and attacks by militants on facilities in its Niger Delta energy hub. Oil sales account for 70 percent of government revenues.
Several states around the country raised money on the domestic bond market and from banks to fund infrastructure projects at the peak of oil prices. But as crude prices plunged many have found themselves unable to pay bills or salaries.
A total of 2.7 trillion naira is outstanding, Finance Minister Kemi Adeosun told reporters in the capital, Abuja, after a cabinet meeting. Money is owed to state governments, contractors and oil marketers, she said, as well as power generation and distribution companies.
Some 740 billion naira of pension and salary arrears and 1.93 trillion naira of other obligations are also outstanding, including to federal government contractors and suppliers.
Adeosun said the programme required final approval from parliament. ($1 = 305.00 naira) (Reporting by Felix Onuah and Alexis Akwagyiram, editing by Larry King)