President of the Senate, Dr. Abubakar Bukola Saraki, on Wednesday, March 28th read an Executive Communication from President Muhammadu Buhari on the need to establish a promissory note program and a bond issuance to settle Nigeria’s local debts and contractual obligations.
President Buhari, in his letter addressed to the Senate President, stated that the establishment of the promissory note and bond issuance program had become imperative to clear certain obligations of the federal government that include unpaid obligations to pensioners, salaries and promotional arrears to civil servants; obligations for petroleum marketers; contractors and suppliers debts; unpaid power bills and obligations from tariffs requested from 2014; export expansion grants scheme debts; and judgement debts.
“As you may be aware, Section 41(1)(A) and 44(2)(B) of the Fiscal Responsibility Act (FRA) stipulates that the proceeds of borrowing by the government at all tiers shall be applied solely towards capital expenditure,” President Buhari wrote, “To provide legal backing to clear the recurrent expenditure components of the obligations, a request for the amendment of the FRA was sent to the National Assembly via a letter to the Presidency on 4th August 2017.”
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