Relief For States As Buhari Approves N656bn Payment To Cushion Impact Of Bailout Deductions

In a bid to cushion the negative impact of the deduction of bailout facility on the revenue of state governments, the Federal Government has given approval for the release of N656.1bn to states.

Already, approval of President Muhammadu Buhari has been received to disburse the amount to the state governments over a period of six months.

The Minister of Finance, Budget and National Planning, Mr. Zainab Ahmed who confirmed this said the N656.1bn will enable states to meet their salary and other obligations.

She spoke at the National Council on finance and Economic Development (NACOFED) conference held in Lagos.

She explained: “The approval of Mr. President has been obtained for a bridging facility in the sum of N656.1bn to be granted to states over a period of six months towards cushioning the effects of their resumption in the repayment of the three federal government bailout facilities (Salary Bailout, Excess Crude facility and Budget Support facility)

“Already, the modalities of the facility has been worked out and the disbursement is expected to commence by the CBN very soon.

“Government will also continue to provide other financing options to states in the form of concessionary loan facilities to support the development of vital sectors of the economy such as health, agriculture and SMEs aimed to complement the states in fighting the pandemic, creating the needed job for the people and alleviating poverty.

“The combined effect of these policies would assist in addressing the current security and other socio-economic challenges confronting the nation.”

She also disclosed that the World Bank has approved an additional $750m financing to support the States’ Fiscal Transparency, Accountability and Sustainability (SFTAS) programme.

SFTAS is a $750m programme to reward States for meeting any or all of nine indicators that demonstrate improvements in fiscal transparency, accountability and sustainability.

The nine indicators are an offshoot of the previous Fiscal Sustainability Plan of the Federal Government where States were to be rewarded for meeting up to 22 targets.

The World Bank had supported the Federal Government to incentivize the States to properly achieve the 22 point Fiscal Sustainability Plan which has now been redesigned as the nine Disbursement Linked Indicators under SFTAS

The SFTAS programme is part of efforts of the Federal Government to further enhance the transparency and accountability in the use of public resources through the implementation of the Open Government Partnership which Nigeria signed to in July 2016.

According to her, “The introduction of the SFTAS programme for results and other similar programmes by the federal government assisted by World Bank are initiatives aimed at strengthening public finance management at the sub-national levels.

“I am highly impressed with the commitments shown by all the 36 state governments in implementing the reforms brought about by these laudable programmes.

“To this end, the federal government recently concluded arrangements with the World Bank to further make available another sum of $750 million as additional financing for the states under the SFTAS programme.,”

She further pointed out that the federal government through the Central Bank of Nigeria (CBN) recently cut-down the interest rate on intervention facilities from nine per cent to five per cent per annum, which according to her, would aid growth and recovery.

She added: “The last couple of years presented series of challenges to us as a nation and the entire globe. From the decline in revenue to slow growth and recovery largely due to the fall in crude oil prices on account of falling global demand and the containment measures to fight the spread of COVID-19, which affected virtually every sector of the economy.”