Nigeria has restructured the commercial bank loans of 13 cash-strapped state governments as Africa’s biggest economy seeks to cut domestic debt piled up due to falling oil revenues.
Nigeria’s 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.
The Debt Management Office has issued bonds for 13 states, which had run into trouble servicing commercial loans worth 252 billion naira, 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 $2.1 billion in newly acquired Nigerian natural gas export dividends, central bank interventions of 250 to 300 billion naira and commercial loan restructuring by the DMO.
The debt office had already restructured loans worth 322 billion naira 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 660 billion naira, $3.3 billion the statement said. Several of them borrowed in the domestic bond market and from banks to fund infrastructure projects.

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