The government has explained that the loan was in anticipation of a bailout fund from the federal government.
The explanation comes as the state government also affirmed that it has not received its share of the N1.6b approved by the Federal Government as flood intervention in 16 states.
Providing the clarification in a statement on Tuesday, the State Commissioner for Finance, Alhaji Demola Banu disclosed that the amount is repayment of a N4.8b loan facility the local councils secured in 2015 from three commercial banks to pay two months' salary arrears owed their workers and pensioners.
He said the loan was in anticipation of a bailout fund from the federal government, which they eventually did not get.
The Commissioner further explained that the deductions are usually made at source by the creditor banks before remittance to the State Joint Accounts.
Also, the Commissioner said that the N1.6billion recently approved by the Acting President, Prof. Yemi Osinbajo was meant to be disbursed for victims of flood in 16 states of the federation, including Kwara state.
Banu, however, noted that the Federal Ministry of Finance was directed to release the money directly to the National Emergency Management Agency (NEMA) for onward direct disbursement to the victims in the affected states.
The Commissioner, therefore, emphasized that the fund was not released to the Kwara State government.