Federal Government Disburses N700 Billion to Settle Contractors’ Debts

As part of efforts to clear long-standing debts and inject liquidity into the economy, the Federal Government has processed payments of verified obligations owed to local contractors to the tune of over ₦700 billion.

This was made known by the Federal Ministry of Finance in a statement issued by its Director, Information and Public Relations, Efe Ovuakporie, on Monday, June 8, 2026, a report said.

According to the ministry, an estimated ₦436.6 billion was processed in May alone, while payments had also been approved for more than 1,240 contractors from across Ministries, Departments and Agencies.

According to the ministry, the payments were approved by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, following a verification and reconciliation exercise to ensure that only duly validated claims were paid.

It said the latest disbursements were part of the government’s efforts to address inherited payment obligations, particularly debts affecting indigenous contractors, small businesses and medium-sized enterprises.

1,240 Contractors Benefited
The ministry stated that the payment approvals would offer immediate assistance to businesses across the country and increase confidence in the government’s determination to honour its obligations.

“The Federal Ministry of Finance has approved payments to over 1,240 contractors, providing immediate liquidity support to businesses across the country, and reinforcing the Federal Government’s commitment to meeting its financial obligations,” the statement read.

It said contractors with verified claims of ₦100m or less were prioritised in the latest batch of payments.

The ministry said the decision was made to provide relief to smaller contractors, many of which have been hampered by delayed payments and could use the relief to start operations and meet pressing financial obligations.

“Contractors who have been given priority for payment in the latest batch are those with verified claims of about ₦100m and below. “The release of funds is expected to bring immediate relief to hundreds of businesses to return to project sites, pay workers, settle suppliers and meet financial obligations to support economic activity across the country,” the ministry said.

The ministry also said payment activities had grown significantly in recent months, with ₦436.6bn processed in May alone.

The development, it said, was a renewed push by the government to settle verified debts and support economic growth through improved cash flow to contractors and service providers.

“In the past few months, the Federal Government has made payments of over ₦700bn under different categories of verified obligations to local contractors. “During the month of May alone, transactions worth about ₦436.6bn were processed, indicating a marked acceleration in payment activity towards unlocking liquidity and driving economic growth,” the statement said.

The ministry said the payments will allow beneficiaries to resume work at abandoned or delayed project sites, pay workers, settle suppliers and complete ongoing projects.

The approach would also help preserve jobs and support economic activities across different sectors and regions, it added.

The ministry said the government intentionally gave preference to a large number of smaller contractors instead of concentrating the payments among a few major beneficiaries.

It said that this would help to widen the economic impact of the disbursements and ensure that more businesses across the country benefit from the payment exercise.

The latest payments are expected to boost confidence among contractors, suppliers and service providers doing business with the government, the statement said.

The ministry also said the disbursements were consistent with the administration’s commitment to addressing inherited liabilities in a transparent and fiscally responsible manner.

The Federal Ministry of Finance said it was committed to meeting its legitimate obligations at the appropriate time and that the government would continue to apply verification and reconciliation processes before making payments.

It said the approach would help to reduce outstanding liabilities, improve public financial management and support the delivery of public services and infrastructure.

This comes on the heels of reports that the Federal Government has earmarked ₦1.7 trillion in the 2026 Appropriation Bill to offset outstanding debts owed to contractors for capital projects carried out in 2024.