The Federal Government has intensified efforts to clear outstanding debts owed to local contractors, disbursing more than N700 billion in verified claims over the past few months.
The Ministry of Finance disclosed on Monday that payments amounting to about N436.6 billion were processed in May alone, underscoring what it described as a significant acceleration in the settlement of long-standing obligations.
In a statement issued by the ministry's Director of Information and Public Relations, Efe Ovuakporie, the government said more than 1,240 contractors across Ministries, Departments and Agencies (MDAs) had benefited from the payment exercise.
The ministry explained that the payments followed a rigorous verification and reconciliation process approved by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, to ensure that only legitimate claims were honoured.
According to the statement, the initiative is part of broader efforts to address inherited liabilities while providing financial relief to businesses, particularly indigenous companies and small and medium-scale enterprises.
It noted that contractors with verified claims not exceeding N100 million were given priority in the latest round of payments.
The ministry said the intervention would improve cash flow for affected businesses, enabling them to return to project sites, meet payroll obligations, settle debts owed to suppliers and continue ongoing projects.
"The Federal Government has processed payments exceeding N700 billion across various categories of verified obligations owed to local contractors," the statement said, adding that the exercise was designed to unlock liquidity and stimulate economic activities nationwide.
It further stated that distributing payments among a large number of smaller contractors rather than concentrating funds on a few major firms would ensure broader economic benefits across different sectors and regions.
The ministry expressed optimism that the move would strengthen confidence in government contracts and improve relationships with contractors, suppliers and other service providers.
It added that prompt settlement of verified obligations would help preserve jobs, sustain businesses and accelerate infrastructure delivery across the country.
Reaffirming its commitment to fiscal responsibility, the ministry said the government would continue to clear legitimate debts in a transparent manner while strengthening public financial management.
The payment drive aligns with the Federal Government's plan to settle outstanding liabilities, with N1.7 trillion already earmarked in the 2026 budget for contractor debts arising from capital projects executed in 2024.
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