The N153bn refund to states

PENULTIMATE week, President Muhammadu Buhari, as part of his administration’s move to provide direct stimulus through government spending, boost demand at consumer level and reverse the slowdown in economic activity, approved a total of N522.74 billion disbursement to states as reimbursement for over-deductions on external debt service. A statement by the Minister of Finance, Mrs. Kemi Adeosun, said the debt service deductions were in respect of the Paris Club, London Club and multilateral debts of the federal and state governments, and that the first tranche of N153.01 billion was currently being processed for release to 14 states. It added that state governments had submitted to the Federal Government, claims of over-deductions for external debt service between 1995 and 2002 as a result of allocations on First Line Charge deductions from the Federation Account Allocation Committee (FAAC).

It will be recalled that Nigeria reached a final agreement for debt relief with the Paris Club in October 2005. However, some states had already been overcharged at the time. On request by the state governments for a refund of money owed by the Federal Government, President Buhari therefore directed that claims be subjected  to verification by the Debt Management Office and a team was established and given the mandate to scrutinise the claims and reconcile them with available records. The Federal Government reached an agreement to pay 25 per cent of the amounts claimed subject to a cap of N14.5 billion to any given state, with a promise that balances due thereafter would  be revisited whenever fiscal conditions improved.

Given the experiences in the past when the extra-budgetary funds released to the states in the country were expended with scant regard for accountability and the due process, it is indeed heart-warming that the current disbursements are predicated on a viable structure.  Going by the present arrangement, the state governments are expected to utilize 50 percent of the funds in paying arrears of salaries, while another 50 percent will be committed to projects that have a direct bearing on the living conditions of the people. In this connection, we urge the Federal Government not to see the current arrangement as a mere gentleman’s agreement but to monitor its implementation to the letter.

While, in a federation, the Federal Government is not expected to exercise undue supervisory powers over the states, nothing stops it from seeking to ensure that the released funds are not frittered away by the state governments. One way to do this is obviously to ensure that future disbursements will be tied to satisfactory implementation of the present agreement. On their part, members of the Nigeria Labour Congress (NLC) and affiliate unions should endeavour to familiarize themselves with the terms of agreement guiding the current disbursements, and refrain from making demands that are not predicated on them.  While workers deserve their wages, the thinking behind the agreement to commit half of the disbursed funds to projects meant to cater for the needs of the general public should not be defeated.

We encourage the state governments to utilize the Paris/London club funds as agreed, and not as free funds to lubricate unrealistic projects. Already, some state Houses of Assembly have called on the state governments to use the money in offsetting workers’ salaries. There is no doubt that paying the salaries and allowances of workers will enhance their spending power and lubricate the economy through multiplier effects. We expect the states to do a public disclosure, giving specific details of how the money is going to be, or has already been, utilised, not least because they owe the general public a bounden duty of accountability.

We would also like to advise that the state governments monitor the projects on which half of the released funds will be expended very diligently. If anything, the majority of Nigerians who are already fatigued with fading hopes are bound to respond positively to projects designed to enhance their standards of living. In this connection, the state governors should shun the allure of initiating unviable projects while ignoring those initiated by their predecessors for political reasons. Governance is a continuum and the times demand patriotism and focus, not grandstanding. Nigerians certainly deserve to be made happy as the Christmas and New Year festivities draw nearer, and thereafter.