The federal government on Wednesday approved N2.7 trillion to settle contractors, pensioners and salary arrears.
The sum of N740 billion will go for outstanding pensions and promotional salary arrears (not discounted), while N1.93 trillion (discounted) will go for settling other obligations including dues to federal government contractors and suppliers.
Addressing State House reporters after the Federal Executive Council Meeting on Wednesday at the Presidential Villa, Abuja, the Minister of Finance, Kemi Adeosun, said the obligations accumulated over the last two decades.
She said it would be paid through bonds and promissory notes to resolve long outstanding dues and to also stimulate economic activity.
Mrs Adeosun said certain legacy issues ought to be addressed to stimulate the economy.
“The government must be a driver of growth, and enable private sector activity. It should not be the most significant obligor to many value creating businesses.
“At the same time, we have an obligation to our federal government employees to address these long-outstanding pension and employment benefit issues. We are doing this systematically, and we want to do so once and for all.
“We are enhancing the government’s controls and processes to ensure we do not find ourselves in this situation again. Over the last two decades the federal government has built up over N2.7 trillion of obligations which were not cash backed, and remain outstanding to this day.
“We have developed a solution that will simultaneously resolve these issues, and deliver a boost to economic performance.
“Our solution will remove the drag on economic performance these obligations cause, improve liquidity in key sectors, especially the power sector where we will resolve FG dues to the distribution and generation companies, and so boost investor confidence.
“It will also help to improve non-performing loan ratios in the banking sector, where an unacceptable number of NPL’s are linked to government contracts,” she added.
