About 14 states in the first batch will get reprieve of N153.01billion.
Each state is entitled to a cap of N14.5 billion being 25% of the amounts claimed.
But the government has raised a team to scrutinise claims by states and reconcile with available records.
These developments are contained in a
statement in Abuja by the Special Adviser on Media to the Minister of
Finance, Mr. Festus Akanbi.
The statement said the payment of the
claims will enable states to offset outstanding salaries and pensions
which had been “causing considerable hardship.”
The statement said the states have been
directed to devote a minimum of 50% of any amount disbursed to address
the challenges associated with salaries and pensions.
It said all the funds disbursed will be
credited to an auditable account from which payments to individual
creditors would be made.
The statement said: “State governments
have submitted to the Federal Government (FG) claims of over-deductions
for external debt service arising between 1995 and 2002 as a result of
First Line Charge deductions from the Federation Account Allocation
Committee (FAAC) allocations.
“These debt service deductions are in
respect of the Paris Club, London Club and Multilateral debts of the FG
and states. While Nigeria reached a final agreement for debt relief with
the Paris Club in October 2005, some states had already been
overcharged.
“On the request by state governments for
a refund of amounts owed by the Federal Government, Mr. President
directed that claims be subject to verification by the Debt Management
Office and a team was established and given the mandate to scrutinise
claims and reconcile with available records. The brief for the team was
also extended to include a review of interim payments made under
previous administrations.
“Work has commenced to resolve each
state government’s claim and the exercise is expected to take
approximately 12 months. The exercise will be thorough, including a
complete reconstruction of records dating back to the period in
question.
In the interim, however, state governors
have continued to appeal for release of payment on the grounds of
fairness because some states had already received refunds under previous
administrations.”
The statement gave insights into the conditions attached to the refunds to the states.
It added: “The Federal Government has
reached a conditional agreement to pay 25% of the amounts claimed
subject to a cap of N14.5 billion to any given state. Balances due
thereafter will be revisited when fiscal conditions improve.
“Mr. President’s overriding concern is
for the welfare of the Nigerian people, considering the fact that many
states are owing salaries and pensions, causing considerable hardship.
“Therefore, to ensure compliance with
the directive that a minimum of 50% of any amount disbursed is dedicated
to this, funds will be credited to an auditable account from which
payments to individual creditors would be made. Where possible, such
payments would be made to BVN linked accounts and verified.”
But any state paid refunds in excess of
its outstanding claims might suffer deduction from its monthly
allocations from the Federation Account.
It said: “Due to the fact that
reconciliation is still ongoing and the final outcome might show an
under or overstatement of claims, an undertaking has been signed by
state governors, declaring that in the event the amount already paid
exceeds the verified claim, the surplus would be deducted directly from
the state’s monthly FAAC allocations.
“The total amount approved by the
President is N522.74 billion and is to be paid in batches. The first
batch of N153.01billion is currently being processed for release to 14
state governments.
“The release of these funds is intended
to support the fiscal stimulus programme of the President Muhammadu
Buhari led administration to provide direct stimulus through government
spending. It is particularly aimed at boosting demand at consumer level
and reversing the slowdown in economic activity.”
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