The Debt Management Office (DMO) has restructured the commercial bank loans of 13 cash-strapped state governments as the federal government seeks to cut domestic debt piled up due to falling oil revenues.
Total debts owed by all the states in the country is currently put at N660 billion, according to reports by Reuters.
Public funds have been hit by the more than halving of global crude prices at the end of last year. Revenues from oil sales make up 70 per cent of state income and are distributed between the three tiers of government.
As a result, many states have been unable to pay public salaries in time or continue infrastructure projects and other state services.
DMO has issued bonds for 13 states which had run into trouble servicing commercial loans worth N252 billion, the National Economic Council, a state body, said in a statement. The bonds were issued to 12 commercial banks with which the states had outstanding loans.
The measures are a continuation of a three-pronged bailout for the states announced in July.
It included dividing up $2.1 billion in newly acquired Nigerian natural gas export dividends, central bank interventions of N250 to N300 billion and commercial loan restructuring by the DMO.
The debt office had already restructured loans worth N322 billion for 11 states in August while another 18 had obtained soft loans from a special emergency fund, said the council, without giving details.
Nigeria is divided into 36 states and one federal capital territory, which holds the capital Abuja.
Analysts say the short-term loans are being replaced by long-term sovereign debt.
Nigerian states are in debt to the tune of N660 billion ($3.3 billion), the statement said. Several of them borrowed in the domestic bond market and from banks to fund infrastructure projects.
President Muhammadu Buhari is expected to announce his cabinet this month, nearly four months after his inauguration.
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