Minister of Finance, Kemi Adeosun, says the Federal government will
be granting states a N90 billion loan which is to be paid back within
one year. At a meeting with the finance commissioners of the 36 states
to discuss the Fiscal Sustainability Plan FSP in Abuja yesterday June
14th, Adeosun said the loan will be given to the state governments after
they meet 22 stringent conditions put together by the federal
government. According to her, the loan will be in two tranches
“The loan is in two tranches – N50 billion
for three months to be shared across the 36 states including FCT and
then N40 billion for nine months. The idea is to tie states over for a
year so that they rebalance. The loan is an average of about N1.3
billion per state for the first three months and N1.1billion for the
next nine months. It is a loan and it is fully repayable although it has
a secured tie against future dividends, revenues and any amount that
government might owe the states.”she said
She also announced that state governors are not to collect any more
loans from banks but should rather source for funds from the capital
market. The decision was taken due to the disappointing manner in which
some past and present state governors have managed the loans they have
taken from some commercial banks. She noted that the stability of the
economy in the states would reflect on the economy of the country as a
whole.
“Nigeria’s economy is a confederation of
the economies of her 36 states and the FCT. Thus, we recognise the
critical importance of developing a broad-based economy, with productive
activities in every region and state. At the federal level, to create
headroom for the urgently needed investment in infrastructure, we are
pursuing a very disciplined approach to managing public funds, ensuring
the maximisation of revenues and the minimisation of the costs of
governance. The Fiscal Sustainability Plan, FSP, replicates this
far-reaching public financial management reform programme across all
tiers of government and marks a turning point in the management of state
finances. By raising the standard for public financial management in
the areas of transparency, accountability and efficiency, states will be
repositioned to embark on a path towards fiscal independence. On the
cost side, the pressure is to cut costs, starting with the commitment to
eliminate, once and for all, the menace of ghost workers by BVN
checking of payroll and the requirement that all salary payments are
made directly to individual accounts. This will enable states control
the size of their wage bill and ensure that it is affordable. The formal
commitments being made to improve expense management, greater
efficiency in recurrent spending and prudent debt management will
combine to ensure that states can move towards improved long term
financial health. In the area of revenue, the FSP is based on the
fundamental principle that each and every state in Nigeria must be
economically viable. Accordingly, it recognises the fact that Internally
Generated Revenue, IGR, must be maximised and we have extended the
definition of revenue beyond the traditional confines of taxes, licences
and fees.”she said
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