Nigeria’s 36 states were offered yet another financial bailout by the Federal Government yesterday in a fresh bid to reflate the beleaguered economy.
Yesterday’s bailout came in the form of an informal restructuring of the loan obligations of the states which they do not now have to repay for an unspecified period of time.
The Federal Government said it plans to ensure that cash got into the hands of the people, especially civil servants through consistent payment of salaries of staff at different levels.
According to the government, it had become imperative to halt further loan repayment deductions from the FAAC allocations to the states in order for them to prioritise the payment of staff salaries.
Finance Minister, Kemi Adeosun said though the Federal Government is borrowing to pay salaries, it plans to support fiscally sensible statesand has directed that they submit their financial data for review and profiling. The deferral, she emphasised, is not a bailout .
Briefing newsmen after the monthly National Economic Council (NEC) meeting, chaired by Vice President Yemi Osinbajo, Adeosun said: “We have to put money into people’s pockets so that people can start spending just to get the economy moving.
“Nobody stimulates the economy by austerity but by spending. So in some states as you know, the state government is the highest employer of labour, so if the state government is unable to pay, nothing happens. We have prioritised getting the states back into good
“We are looking at N299billion this month and that is because of the very low oil prices that were recorded in January and February. If you remember, oil prices went as low as $28 and $31and of course that has led to a very low Federation Account as a result of which I approached
the president and the governors that we defer the loan deductions from the Federation Account entitlement.
“The government is very committed to stimulating the economy and recognises the ability of states to meet salary obligations is a very important part of getting the economy moving again. To that end, the president approved that deferral. The states have been asked to submit financial data that would allow us to module and predict how much support in terms of loan deferrals we might need to give just to get through this period until the economy recovers” .
She emphasised that “it is not a bailout but a deferral, postponement of deductions, just to allow the states to have the cash that they need to meet their salary obligation”.
All the governors endorsed the request to provide financial data, to work on biometric and other initiatives to clean out fraudulent entries like ghost workers on their payrolls, efficiency , maximising their Internally Generated Revenue.
“We have asked them to give us their financial data so that we can work together to create a financial module and understand what government needs to do to support the states.
“Of course, we are borrowing, but we have got to make sure that we are borrowing to support the states that are fiscally sensible and prudent in managing their money,” she said.
On the duration of the deferral, Adeosun said a month has been guaranteed and that there might however be a possible extension, depending on the
profile of different states.
“That is why we are asking for information from states to enable us build a module so that we would know if it is three months, six months or however many months to supplement the shortfall to ensure that within reasonable parameters, majority of states can pay salaries.
“And that is taking into account that different states have different obligations and different profiles but the idea is to support them to be able to pay” she said.
Adeosun said she also reported to council on the balance of excess crude account, which stands at $2.3billion, on account of the interest that has been received since the last update.
NEC which consists of the 36 states and relevant economic agencies of government also approved the constitution of a six-man search board for the Nigerian Sovereign Investment Authority. They are expected to search for board members for the Nigerian Sovereign Investment Authority board.
Nasarawa state governor, Umaru Tanko Al-Makura, who also briefed journalists after the meeting, said one of the critical issues discussed at the NEC meeting was the issue of power, in line with the priority the Buhari led administration places on power and the challenges being
NEC reconstituted the board of the Niger Delta, Power Holding Company, (NDPHC), which is to facilitate effective distribution across the country. There was unanimous acceptance of the recommendations and reconstitution of the board to include one governor from each of the six geopolitical zones. For the North
Central Zone, Plateau to represent: for the North East zone, Adamawa governor ; North West, Kebbi State; South East, Anambra; South West, Lagos and South South, Edo. The committee has since been inaugurated
by the Vice President.
Council also discussed the issue of bail out. The CBN governor gave an update about states that have been able to access the bail out and which is put at about N689.5 billion which has been disbursed as salary bail out so far.