The Senate on Tuesday asked the Federal Government to urgently pay the sum of N2 trillion owed local contractors.
The debts, the Senate noted, are those owed contractors operating in the oil and gas sector as well as others in the pharmaceutical industry.
Senate President, Bukola Saraki, during a debate on the motion sponsored by Remi Tinubu warned that the inability of the Federal Government to repay its debts would adversely affect the economy.
“The inability of the government to pay its debts will have serious impacts on our economy. I know that the Federal Government is making efforts to ensure that they pay their debts. That is why they are trying to raise international bonds to do that. I urge them to hurry up so they can pay these debts,” Saraki stated.
Adopting the motion, titled ‘The Urgent need for the Federal Government to Redeem Local Contractors Debts,’ the Senate expressed worry that the inability of the Federal Government to repay these debts was negatively affecting the economy.
Tinubu said any further delay in servicing these debts may adversely affect business organizations operating in the country.
According to her, since many businesses are indebted to banks, further delay may subsequently affect financial organizations, especially financial institutions.
“The inability to repay subsisting bank loans may affect the purchasing power of petroleum marketers, thus creating scarcity of petroleum products.
“I am further concerned about the alleged failure to pay debts owed to pharmaceutical companies and the impact this may have on the health sector.
“The data released by the Debt Management Office put Nigeria’s domestic debt as at June 30, 2016 at over 10 trillion Naira. Local contractors debt is estimated to amount to an additional N2 trillion.
“Settling these local debts will ensure that affected businesses stay afloat through increase in the circulation of money in order to bring the current economic recession to an end”, she said.
In his contribution, Jibrin Barau, said if contractors are paid their debts, it will enable them to repay their loans to banks. He said in turn, banks will be able to give more loans to business owners.
Chairman, Senate Committee on Local and Foreign Debts, Shehu Sani on his part, said there is an urgent need to repay local contractors, adding that he had been inundated with calls from local contractors.
Also, another lawmaker, Magnus Abe, warned that a repeat of what happened in the past, when banks owed huge debts went under, must be avoided. He said families who are affected by these huge debts are unable to meet their daily obligations.
