The administration of President Bola Tinubu will likely spend about N341.23bn on settling judgment debts between 2023 and 2027, according to findings by The Tide Source.
The judgment debts were listed as promissory notes in a document titled, ‘Schedule of Promissory Notes Issued by Category as at September 30, 2022’ by the Debt Management Office.
According to Investopedia.com, a promissory note is a debt instrument that contains a written promise by one party (the note’s issuer or maker) to pay another party (the note’s payee) a definite sum of money, either on demand or at a specified future date.
Section 4 of the Government Promissory Notes Act states that government promissory notes are paid from the general revenue and assets of the federation.
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It read in part, “The principal sums and interest represented or secured by any government promissory notes are hereby charged upon and shall be payable out of the general revenue and assets of the federation.”
Out of the 21 promissory notes related to judgment creditors, 12 would be settled during the four-year tenure of the current administration.
While two are dominated in naira, the rest will be settled in dollars.
The two naira-dominated judgment debts would cost about N39.07bn while the rest in dollar would cost $393.89m (about N302.61bn, using the exchange rate of the Central Bank of Nigeria of N768.27/$).
The Tide Source observed that a $1.58m judgment debt would be the first to be settled by the new administration by August 11, 2023.
The rest will be settled between October 15, 2023, and February 15, 2027.
The Tide Source earlier reported that the administration of former President Muhammadu Buhari might pass on at least $715.86m judgment debts to the next administration.
The Tide Source also reported that the Federal Government was facing several court cases over alleged breaches of contracts. A compilation of suits filed against the government by local and foreign entities in the past two years may see Nigeria parting with about N7.58tn if the nation loses the cases.
In September last year, the immediate-past Attorney-General of the Federation and Minister of Justice, Abubakar Malami, disclosed that the Federal Government had agreed to pay a foreign investor $496m to settle a long-standing $5.26bn contractual dispute.
The government said the mediation proceedings were under the alternative dispute resolution framework of the International Chamber of Commerce led by Phillip Howell-Richardson.
Olu Daramola (SAN) from Afe Babalola’s Chambers, who spoke with The Tide correspondent recently, said the government was not in the habit of defending cases.
He stated, “Most cases against the government are due to negligence and poor handling, leading to judgment against the government even where there could have been no judgment because it has been poorly defended. But unfortunately, the tragedy is that when you file a case against the government, they may not bother until you get a judgment.
“When you already have a judgment, negotiations become difficult because if you win your case in court and the person is now negotiating with you to take a smaller sum than the one that was awarded in court, definitely you won’t be willing.”
The SAN added that the careless signing of contracts was creating problems for the government.
On his part, Prof Sam Erugo (SAN) said it should be disturbing to citizens that the Federal Government continuously faces threats and imminent penalties or liabilities for alleged breaches of construction contracts.
A senior legal practitioner, Matthew Burkaa, said, “Nobody will be happy to see that funds that are supposed to be used for other things are being used for settlement of litigation expenses.”