FG to issue N785bn bonds to clear pension debts

The Federal Government has announced plans to issue bonds worth N758bn to settle outstanding pension debts. This was revealed by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, during a press briefing in Abuja on Tuesday.

Speaking after the 23rd Federal Executive Council meeting at the Aso Rock Villa, Edun explained that these bonds will clear debts from the old Defined Benefit Scheme, which existed before the Contributory Pension Scheme was introduced in 2004.

“An equally important issue of social interventions is pensions. There was approval for the government, through the Debt Management Office, to raise a Federal Government Bond of about N758bn,” Edun stated. He explained that the debts accumulated because of regular wage increases over the years: “Someone who was on the defined benefit scheme yet to retire would need a top-up of their contributions or the amount due to them every time there was a wage increase, every five years or so.”

Read Also: FG’s 10-year bond rallies on 22.6% yield

The council also approved a €30m (N46.30bn) financing deal with the French Development Agency. This money will be used to build sustainable, clean-energy student housing across Nigeria’s universities, working with Family Homes Fund Limited. “It is for student tertiary accommodation at project sites throughout the country to provide sustainable and clean energy-based accommodation for students; we all know what an important intervention that is for the educational sector and students, given the shortage,” Edun explained.

In addition, the government approved the National Single Window Project, a new initiative to make Nigeria’s export processes more efficient and competitive. The project’s hardware installation will take about 12 months, while the complete software and technology implementation will be finished within 24 months.

Edun emphasised that this project will boost government revenue and help Nigeria compete better globally, especially within the African Continental Free Trade Agreement. “It also speaks to increasing government revenue. So it’s both on the fiscal side; it is both revenues earned in terms of foreign exchange and government revenue,” he explained.

He added that clearing these pension debts will provide “tremendous relief to the beneficiaries” who have been waiting for their rightful payments.