The forthcoming administration under President Bola Tinubu is projected to allocate around N187.32 billion for settling outstanding debts owed to local contractors within the current year. This estimate is based on the analysis conducted by The PUNCH, using information from a document titled ‘Schedule of promissory notes issued by category as at September 30, 2022’ provided by the Debt Management Office.
The debts, categorized as promissory notes, were highlighted in the document. A promissory note is essentially a financial instrument containing a written pledge from one party (the issuer or maker of the note) to pay a specific amount of money to another party (the payee of the note), either upon request or on a designated future date.
As outlined in Section 4 of the Government Promissory Notes Act, government promissory notes are settled using the general revenue and assets of the federation. The legislation asserts that both the principal sums and any interest linked to government promissory notes are to be paid from these revenue sources.
The Debt Management Office report showed the issuance of two promissory notes aimed at resolving debts owed to local contractors. The initial note was issued on November 23, 2020, while the second was released on July 12, 2021. These debt settlements are expected to encompass various currencies, including naira, dollar, and euro, with the liability amounts being N57.83 billion for naira, $26.48 million (N19.78 billion) for dollar, and €133.76 million (N109.71 billion) for euro.
Opinion:
However, the action taken by the incoming administration to address outstanding debts with local contractors is a significant step towards fiscal responsibility and maintaining a balanced financial landscape. Clearing such debts can enhance confidence among contractors and contribute to the overall stability of the economy.