Muhammadu Buhari vowed on Tuesday to recover billions of dollars allegedly stolen by officials and restore financial "sanity", accusing previous governments in Africa's biggest economy of throwing the rulebooks "to the dogs".
Muhammadu Buhari's strong words came after a meeting with the governors of Nigeria's states, in which they said they were 658 billion naira ($3.3 billion) in debt and needed federal government support to offset a funding crisis.
Zamfara state governor Abdulaziz Yari Abubakar said the governors had suggested three ways out: the government could refund money spent on federal projects such as roads, banks could extend existing loans to up to 20 years, or the government could share out oil revenues usually saved in the so-called Excess Crude Account (ECA).
The president, who took office last month after defeating Goodluck Jonathan in Nigeria's first transfer of power through the ballot box, vowed to recover billions allegedly stolen by public officials.
"There are financial and administrative instructions in every government parastatal and agency. But all these were thrown to the dogs," Buhari said in a statement after meeting the governors in the capital Abuja.
"The next three months may be hard but billions of dollars can be recovered, and we will do our best," he said. "We will restore sanity to the system."
Running on empty
Several states borrowed in the domestic bond market and from banks to fund infrastructure projects. But the price of crude, which represents 80 percent of Nigeria's revenue, has since plunged, leaving the government unable to pay bills or salaries.
The naira currency has fallen sharply despite the central bank spending billions of dollars to try and prop it up.
Gross revenues distributable to the three tiers of government federal, state and local hit a five-year low in April due to frequent shutdowns of oil and export terminal pipelines and depressed crude prices.
Government revenues distributed for May rose to 409.3 billion naira, up 5.4 percent from the previous month, but the Finance Ministry said oil pipeline shutdowns continued to hamper earnings.
Details of Nigeria's economic and financial position would be published within four weeks, Buhari said.
He said the government would look into whether ECA funds could be used to cover unpaid salaries after saying on Monday that treasury coffers were "virtually empty".
The ECA had $2.078 billion as of June 23, the Finance Ministry said.
Standard Chartered's head of Africa research, Razia Khan, said that the level of state debt was "especially problematic".
"While an early release of the ECA may provide a partial solution, it is not yet known how much Nigeria will have managed to accumulate in its ECA in recent months.