Nigeria - President Muhammadu Buhari has approved the payment of the balance of the Paris and London Clubs refunds to the states with a proviso that they use the money to clear all outstanding salary arrears.
This was announced at the end of a meeting the president held with a delegation of the Nigerian Governors Forum at the Aso Rock Presidential Villa in Abuja yesterday.
President Buhari said the backlog of workers’ salaries must be paid before Christmas.
He ordered Finance Minister Kemi Adeosun, Budget and National Planning Minister Udoma Udoma and the Governor of the Central Bank of Nigeria Godwin Emefiele to negotiate with the governors on the payment of the funds.
The federal government has so far released a total of N760.18 billion to the 36 states and the Federal Capital Territory (FCT), Abuja in the first and second tranches of the Paris Club Refunds.
The president on December 2, 2016 approved the payment of N522.74 billion to the 36 states as part of the reimbursement for the over-deductions on the Paris Club loan.
Addressing State House correspondents later, Imo State Governor Rochas Okorocha said President Buhari expressed the need to ensure that all Nigerian workers enjoy a beautiful Christmas.
He said: “We also used the opportunity to review our working relationship with the president from the states and we found out that we’re in harmony.
“There is no difference between us and the president. Everybody seems to be happy working together. But particularly, we commended the president for getting Nigeria out of recession within such a short time. We commended Mr. President and everybody left quite happy.
“We are looking at getting the balance of Paris Club refund thrashed out once and for all. We also made a request for Mr. President’s approval that the balance should form part of our 2018 budget, because we can’t include it until we are sure that the money is coming. That was also sorted out.
“So, as it is now, the issue of workers took the centre stage and Mr. President was concerned about those who depend on their salaries to feed their families and pay their house rent and he had the assurance from the governors that we will meet up those obligations. It was emphasised that state and federal governments must work together to get Nigeria out of its present economic predicament to make Nigeria a better society for all of us.”
Asked if he meant that all salary arrears will be cleared by each state before Christmas, Okorocha said “Yes, with the Paris Club coming, every worker should enjoy his/her Christmas. I made it clear.”
Kaduna State Governor Nasir El-rufai said the Paris Club figures needed to be reconciled, explaining that “While the reconciliation process was going on, the president approved that 50 percent of the original amount be paid to the states. The payment started from last year. We still have the balance of the first 50 percent.
“This is what the president said should be paid to state governments to meet their obligations before Christmas because he is concerned that many families depend solely on their salaries to for rent, for the festive period. That has been decided. The balance of the first 50 per cent is what we are expecting now before Christmas. The President has approved that and said it must be paid.”
Asked to disclose the amount approved yesterday, El-rufai responded thus: “I don’t know the amount. I’m sure that if you contact the Ministry of Finance, they can give you the total amount. I only know what my state is likely to get. There is another 50 percent that needs to be paid when the figures are reconciled. The reconciliation is going to be concluded before the end of the year. The Chief of Staff to the President will ensure that the committee working on the reconciliation will conclude the work before the end of the year.
“So, what the governors are requesting from the president is a directive - ‘go ahead to include the next 50 per cent in your 2018 budget and that is going to be looked at.’ Every state will get its own share of the Paris Club refund. It will not get more. Every state has a specific amount that was deducted. That amount may be enough to cover the arrears; it may not be, because you cannot get more than you are entitled to. It varies from state to state. My state has no salary arrears at all.
“So, it’s a mute issue. Kano doesn’t have salary arrears. Whatever we are getting, we just continue with our development projects. Some states have salary arrears that are bigger than the Paris Club refund they are getting. Even when they get it, they will not be able to clear the salary arrears. But it is better to reduce it so that people will have happier Christmas than not.”
N760.18bn released to states so far
The federal government has so far released a total of N760.18 billion to the 36 states and the Federal Capital Territory (FCT), Abuja in the first and second tranches of the Paris Club Refunds.
Daily Trust’s analysis of the two tranches of the refunds showed that N516.39 billion was released in the first tranche while N243.80 billion was disbursed to states in the second tranche.
A statement signed by the Director of Press of the Federal Ministry of Finance, Salisu Dambatta, indicated that the refunds were in respect of the debt service deductions from the shares of states from the federation account made in respect of the Paris Club, London Club and Multilateral debts of the FG and States.
Analysis of the refunds showed that Taraba State has so far received the largest chunk of the refunds in the two tranches, totaling N40.54 billion.
The state received N34.93 billion in the first tranche and N5.61 billion in the second tranche.
The oil producing states of Delta, Akwa Ibom and Bayelsa states received the three highest amounts of refunds after Taraba State to the tune of N37.60 billion, N35.98 billion and 34.90 billion respectively in the two tranches.
In the first tranche, Delta got N27.61 billion; Akwa Ibom got 25.98 billion, Bayelsa got N24.90 billion while in the second tranche, the three oil producing states got N10 billion each.
The FCT got the least refund of N2.05 billion in the two tranches, being N1.37 billion in the first tranche and N684.87 million in the second tranche.
Gombe, Ebonyi and Nasarawa States got the least refunds after the FCT amounting to N13.42 billion, N13.52 billion and N13.65 billion respectively in the two tranches combined.
Further breakdown showed that Gombe state got N8.95 billion in the first tranche and N4.47 billion in the second tranche; Ebonyi got N9.02 billion in the first tranche and N4.51 billion in the second tranche while Nasarawa state got N9.10 billion in the first tranche and N4.55 billion in the second tranche.
The federal government made the releases on conditional basis upon a minimum of 50 percent being applied to the payment of workers’ salaries and pensions.
In November, 2015, the federal government attempted to save states from their financial crises through the restructuring of the N575.516 billion bank loans owed by 23 states into Federal Government of Nigeria (FGN) Bonds.
The federal government tagged the gesture, which got the approval of President Muhammadu Buhari, as a “stabilisation package” to bail out states that had been unable to meet their financial obligations.
The stabilisation package saw N575.516 billion state loans from commercial banks being restructured into FGN bonds.
As at then, states’ commercial banks loans were about N700 billion secured with statutory allocations and internally generated revenue, which dwindled and became inadequate to meet debt service obligations for many states and leaving little or nothing to pay salaries and meet other recurrent obligations.
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