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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