The federal government has explained that N2 billion out of the N5 billion loan offered to each state as a palliative to cushion the impact of the petrol subsidy removal has been released so far.
Wale Edun, minister of finance and coordinating minister of the economy, spoke on Friday during a press conference in Abuja. At the press briefing, they said the government is aware of the potential negative consequences of releasing all of the palliative funds at once, “so it decided to release them gradually”.
“On the issue of the 5 billion, it is a combination of grants from the federal government and borrowing by the states,” the minister said.
“And of course, although the sum of 5 billion is earmarked, you will agree that releasing such funds across all the states simultaneously once will be self-defeating because it will lead to an inflationary spiral. It will lead to the cost of goods being sold going up, affecting the exchange rate.
“And so, it is N2 billion that has been released as an initial interview; nation and FCT will be included in my information.”
It would be recalled that in August, President Bola Ahmed Tinubu-led administration announced an N5 billion palliative package for each federation state, including the federal capital territory (FCT), to cushion the impact of the removal of the petrol subsidy.
Babagana Zulum, governor of Borno, had said the palliative would enable state governments to procure 100,000 bags of rice, 40,000 bags of maise and fertilisers to cushion the effect of food shortage across the country.