…Bail out stopped
The sum of N90 billion has been announced for states by the federal government as part of its Fiscal Sustainability Plan (FSP) for the nation.
Through the FSP, the sum of N50 billion for three months would be shared across all the participating States and then N40 billion for 9 months.
Finance Minister, Kemi Adeosun, stated this at a Meeting held with Commissioners of Finance on the Fiscal Sustainability Plan ( FSP) in Abuja.
She said “N50 billion for 3 months to be shared across all the participating States and then N40 billion for 9 months. The idea is to tie state over for a year so they can rebalance the portfolio, which is an average of about 1.3 billion per state for the first 3 months and N1.1billion for the next 9 months,” she said.
Adeosun said the bond was federal government guaranteed, said, states are expected to pay back after 18 months period.
She said states would however meet 22 conditions before accessing the loan.
“This is not a bailout, in the bailout, there were no conditions attached, here there are 22 conditions for states to sign to.”
Some of the conditions among others, are for states to eliminate ghost workers from payroll; publish state budget online annually; publish audited annual financial statements within 9 months of financial year end; implement a centralised Treasury Single Account (TSA).
Harping on the framework, the Minister said, “at 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 the individual accounts.
“This will enable States to control the size of their wage bill and ensure that it is affordable. The formal commitments being made to improved 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 must be maximised and we have extended the definition of revenue beyond the traditional confines of taxes, licences and fees.
“In some States, there is no significant private sector and therefore, States are being encouraged to identify their own areas of comparative advantage and to embrace partnerships with the private sector to generate revenue and stimulate development. Such projects will establish the viability of key opportunities and will attract investors.
This is a development to be encouraged and emulated. Never before has there been a greater need nor a greater opportunity to look inwards to identify and explore local resources.
“This may entail, in certain States, a fundamental review of the role of Government in line with revised objectives, but will yield long term sustainable dividends.”
She further said, “When fully implemented, The FSP will begin the process of guaranteeing that States take responsibility for their financial viability. Pursuing the objective that IGR rather than Federal Allocation, should be their principal focus of revenue is a fundamental change in approach. This is in line with our objective to have a diversified and inclusive economy where every state adds value.