FG to begin deduction of N614bn bailout fund this month
to stop salaries not linked to IPPIS from October
Despite outcry by state governors, the Federal Government said on Tuesday that it will begin to deduct the N614billion conditional budget support loan given to states by Central Bank of Nigeria (CBN) to pay salary arrears from this month’s federal allocations.
In like manner, Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed disclosed that President Muhammadu Buhari has given a deadline of October 2019 for every ministry, department and agencies (MDAs) to be enrolled into the Integrated Personnel Payroll System (IPPIS).
Buhari has a few weeks ago set up a committee comprising of some governors, CBN Governor and Ahmed to work out modalities of how the loan would be repaid.
At the public presentation of draft 2020 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) in Abuja, Ahmed said the amount “was a conditional budget support provided by the CBN to help states pay salaries, gratuities and pensions.
“CBN provided N650 billion in loans at nine percent with a moratorium of two years. The Federal Ministry of Finance helped in disbursements with documented approval by the presidency”, adding that “the money belongs to CBN and is going to be paid into CBN account.”
On IPPIS, the Minister noted personnel costs had continued to rise such that N3.0 trillion was being devoted to it in 2020.
“The FGN is, however, taking steps to contain the rising personnel costs, including an October 2019 deadline by Mr President for all MDAs to implement IPPIS.”
She hinted that the Federal Government may move from an annual to multi-year budget cycle as soon as the law was amended to accommodate it.
“Our laws allow only an annual budget cycle. The next level for us is to get a multi-year budgeting process. This process is a very extensive one and it takes a lot of time and effort from all of us. We will be moving to that gradually.”
The Minister also agreed that there were too many tax waivers and incentives in the system “but our partners in Trade (Ministry of Industry, Trade and Investment) will not agree with us.
“We also agree that there has to be a review of the pioneer status certificate issuance process because the waivers and the incentives are really costing us a lot.
“But when a decision has been made and approvals have been given, and a private business makes an investment decision based on those incentives, you can’t pull it out overnight.”
Ahmed then warned about the African Continental Free Trade Agreement (ACFTA), which Nigeria joined recently, which she said could bring tremendous opportunities for Nigeria in the medium term.
“However, the ACFTA could also create a nightmare situation for the country unless the right policies and actions are implemented expeditiously to improve Nigeria’s economic competitiveness.”