The Federal Government has right to ensure that each State Government pays debts guaranteed by the Federal Government.

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In an action brought by the Attorney-General of Abia state against the Attorney-General of the Federation, the Plaintiff contended that it was unlawful for the 1st defendant and his agent to deduct large sums of money from the plaintiff’s share of the Federation Account without the Plaintiff’s consent for the purpose of settling any debt incurred by Imo state prior to the creation of Abia State.

In dismissing the Plaintiff’s case, the Supreme Court held, inter alia, that the 1st Defendant derives its authority to deduct from the Plaintiff’s share of the allocations of the Federation Account from its agreement with the Plaintiff as its surety and guarantor of loans entered into with foreign creditors. The deductions are therefore not unconstitutional but lawful. The case is reported as Attorney General of Abia V. Attorney General of the Federation (2005) 12 NWLR (Pt940) 452.