World Bank’s Funding Of States’ Fiscal Transparency Programme Hits $1.5bn

The National Programme Coordinator of the World Bank’s States Fiscal Transparency Accountability and Sustainability Programme, Mr. Stephen Okon, said the federal government received the sum of $1.5bn from the bank for implementation of the programme.

The fiscal crisis of 2015-2016 caused by oil price shocks led to two large financial assistance packages by the federal government to the states to help meet basic recuring obligations such as payment of civil servants’ salaries.

The first financial assistance package was approved in July 2015 with no conditions attached and it included restructuring of existing short-term commercial bank loans into longer-term state bonds, guaranteed by the FG with 23 states participating and financing facilities from the CBN.

While progress was made, the implementation of the FSP was uneven and states needed more time to implement reforms.

This made the federal government to approach the World Bank for a loan using the Programme for Results instrument to support the sustained implementation of the FSP as well as elements of the Open Government Partnership commitments at the state level.

Speaking on the implementation of the programme on Monday in Abuja, Okon said the World Bank initially released $750m loan which was made of two major components.

They are the performance-based grants from federal government to states ($700m) which was for states achieving the annual eligibility criteria and the Disbursement Linked Indicators.

He noted that the DLIs are based on the critical reforms in the 22-point FSP and OGP commitments; and Technical Assistance of $50m to states to enable them achieve the DLIs and ensure no state was left behind.

Okon stated further that in order to receive performance-based grants, states have to achieve actual results, which are independently verified by the Office of the Auditor General for the Federation and an external audit firm.

In response to the Covid-19 pandemic, he said the bank also approved additional financing of $750m to expand the Program to support States to implement the National Economic Council COVID-19 Plan.

This brought the total amount approved by the bank for the programme to $1.5bn.

He also said the programme is aimed at improving efficiency of spending and enhance state revenue mobilization to support growth and public service delivery as well as debt sustainability to prevent further fiscal crises which reduces the necessity of further federal bailouts.

Acknowledging the present state of the program, Okon stressed that the programme is fully operational with organizational, technical assistance and verification structures across the 36 States with a very high level of political visibility and ownership.