FG offers states N50b conditional loan facility
The federal government, on Tuesday, admonished states governments to look inward to identify other sources of revenue that would make them more economically viable and financially independent, rather than solely relying on monthly Federal allocations. 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.
Minister of Finance, Mrs Kemi Adeosun stated these in Abuja during a stakeholders meeting held with Commissioners of Finance on the Fiscal Sustainability Plan (FSP). Mrs. Adeosun disclosed that a conditional Budget Support Facility to provide financial relief to State Governments was being developed by the Federal Government. The minister said that the loan facility for the 36 states would be N50 billion which would be access by states that meet the condition for the loan and will also be accessible in every three months with a repayment period of 18 months; explaining that “the loan is a bond guaranteed by the federal government.”
The minister explained further that “by agreeing that further financial support under this guaranteed loan package, is conditional upon independently verified attainment of the 22 milestones, the State Governors are to be commended. They are sending a strong signal that they are indeed partners in the journey towards the recovery of the Nigerian economy and are fully prepared to pay the price for a sustainable future.” She stressed that Nigeria’s economy is a confederation of the economies of her 36 States and the FCT; stating that the federal government recognizes the critical importance of developing a broad based economy, with productive activities in every region and State.
“We must ensure that the necessary conditions for growth are firmly put in place. We are working to achieve this through investment in enabling infrastructure and reforms in the ease of doing business, which will spur growth and development in the private as well as public sectors. “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.”
According to the Minister, the proposed facility will be conditional on the implementation of a comprehensive 22-point Fiscal Sustainability Plan (FSP) that was unanimously agreed by State Governors during the National Economic Council meeting that was held on 19th May, 2016. She explained that the overall aim of the programme was to support States to overcome current fiscal challenges whilst reforming financial management to ensure their long-term viability.
The FSP highlights five key strategic objectives: To Improve Accountability & Transparency, Increase Public Revenue, Rationalise Public Expenditure, Improve Public Financial Management, and Sustainable Debt Management. The fiscal reform action plan to be implemented by States mirrors the ongoing public financial management reforms being undertaken by the Federal Government. This according to the minister, include: biometric capture of all civil servants, the establishment of an Efficiency Unit within each state, implementation of Continuous Audit, improvement in Independently Generated Revenue (IGR) and measures to achieve sustainable debt management. Access to the proposed facility will be directly tied to the attainment of the fiscal reform milestones under the FSP.
“This is not a ‘bail out’, but rather a necessary short term intervention that is conditional on a comprehensive fiscal sustainability reform plan, and which is ultimately intended to set the States on a path towards fiscal sustainability and support the FG’s drive to reflate the economy, she added Responding on behalf of the 36 states commissioners, the Jigawa State Commissioner for Finance, Umar Namadi, thanked the Federal Government for making the facility available, saying “it is very important step we are going to key in to access this fund. “The conditions are also very important for the states because it is going to make every state to wake up to its responsibility and seek a deeper ways for revenue generation and apply financial discipline in governance.”
