FG Clears Over ₦2 Trillion Capital Budget Arrears, Raises States’ Surplus to ₦7.1 Trillion – Edun

The Federal Government has successfully settled over ₦2 trillion in outstanding capital budget arrears, significantly boosting the financial standing of states and raising their combined surplus to ₦7.1 trillion, according to the Minister of Finance and Coordinating Minister of the Economy, Wale Edun.

Edun disclosed this on Tuesday while briefing journalists in Abuja, explaining that the clearance of the arrears was part of the government’s broader fiscal reforms aimed at stimulating economic activity, improving liquidity, and restoring contractors’ confidence. He said the move aligns with President Bola Tinubu’s Renewed Hope Agenda, which prioritises infrastructure development and fiscal discipline.

According to the minister, the payment of these long-standing obligations will allow contractors and suppliers, many of whom had been hampered by cash flow constraints, to resume work on critical infrastructure projects across the country. “Clearing these arrears sends a strong message that the Federal Government is committed to honouring its obligations, supporting economic growth, and fostering an environment where both local and international investors feel confident,” Edun stated.

The finance minister highlighted that the settlement of the arrears was achieved through a combination of improved revenue mobilisation, expenditure rationalisation, and the plugging of leakages in public finance. He attributed part of the fiscal space created to the removal of fuel subsidies, enhanced oil revenue collections, and better non-oil revenue performance.

Edun also noted that the improved surplus at the state level would empower governors to embark on new developmental projects, pay contractors promptly, and improve service delivery. He urged state governments to channel the additional fiscal space into initiatives that would directly benefit their citizens, particularly in health, education, and infrastructure.

“States now have a stronger balance sheet. It is important that this translates into better roads, functioning schools, improved healthcare, and greater opportunities for the people,” he said.

The minister stressed that the government’s fiscal reforms were designed not only to clear arrears but also to prevent the accumulation of future unpaid obligations. This, he said, would be achieved through stricter budget implementation monitoring, timely release of funds, and the adoption of modern public financial management systems.

Edun explained that capital budget arrears had, over the years, become a drag on the economy, slowing project completion rates, raising contractor debts, and creating bottlenecks in infrastructure delivery. “For too long, our contractors have been owed for work done. This has discouraged investment and delayed vital projects. By paying these debts, we are injecting liquidity into the system and ensuring ongoing projects are completed,” he added.

He also pointed out that the settlement would have a multiplier effect on the economy, as contractors would be able to rehire workers, purchase materials, and engage more local suppliers, thereby stimulating economic activity and creating jobs.

The minister emphasised that the government’s economic management strategy hinges on prudent debt management, increased domestic resource mobilisation, and fostering private sector participation in infrastructure financing. “We cannot rely solely on borrowing; we must generate revenue efficiently and use it wisely,” he remarked.

Edun assured Nigerians that the government would continue to publish updates on its fiscal performance and arrears clearance to ensure transparency and public accountability. “The public has a right to know how resources are being used, and we are committed to full disclosure,” he said.

In addition to settling capital arrears, the government is also working on reforms to streamline capital project approvals, strengthen procurement processes, and ensure value for money in public spending.

Analysts have welcomed the development, noting that paying off the ₦2 trillion arrears could serve as a catalyst for faster infrastructure development and increased investor confidence. They, however, urged the government to pair the fiscal clean-up with deeper structural reforms that address the root causes of arrears accumulation, such as unrealistic budgeting and weak project monitoring.

Economic experts further advised that the newly created fiscal space at the state level should be tied to performance-based projects, ensuring that funds are channelled into high-impact areas with measurable outcomes.

Edun concluded by reiterating that the Federal Government’s focus is on building a stronger, more resilient economy capable of delivering sustainable growth. “Our aim is to put the economy on a trajectory where development is not interrupted by fiscal constraints, and where every Nigerian feels the positive impact of our reforms,” he said.

The clearance of the arrears comes at a time when Nigeria is pushing for renewed investment in infrastructure and industrial capacity to drive job creation, reduce poverty, and enhance competitiveness. With the combined state surplus now standing at ₦7.1 trillion, fiscal analysts believe this could mark a turning point in the country’s subnational economic performance if well managed.