FG Seeks Senate Nod To Borrow To Fund Pension, Salary Arrears

The Federal Government (FG) of Nigeria has written to the National Assembly to amend this year’s budget to enable it settle N2.7 trillion worth of obligations on pension and salary arrears to its workforce.
In a letter signed by the vice president Yemi Osinbajo and was read on the floor of the Senate on Tuesday, the government was seeking a a virement on the 2017 budget to enable it fund recurrent expenditure from proceeds of the debt rather than just capital projects.
Nigeria’s Fiscal Responsibility Act states that proceeds of government borrowings can only be applied towards capital expenditure.
However, the vice president said in his letter to the National Assembly that the amendment was to provide the needed legal backing for the use of proceeds from borrowing in the budget to meet its recurrent obligations.
Nigerian Senate and the House of Representatives resumed from a two-month vacation on Tuesday.
Osinbajo had sent the letter to the Senate last month while President Muhammadu Buhari was on medical vacation in the United Kingdom.
The letter was read out after the Senate reconvened following a seven-week recess.
Africa’s biggest economy grew out of recession in the second quarter as oil revenues rose, but the pace of growth was slow, suggesting the recovery is fragile.
Osinbajo’s letter said the obligations had become inimical to government plans to revive the economy through the provision of modern infrastructure and settle pension and salary arrears dating back five years.
Finance Minister Kemi Adeosun has said the government plans to refinance $3 billion worth of treasury bills denominated in naira with dollar borrowing to lower costs and improve its debt position.

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