A conditional Budget Support Facility to
provide financial relief to state governments is being finalised by the
federal government, the Ministry of Finance has said.
A statement from the ministry of finance
on Saturday, explained that the proposed facility, aimed at providing
support to overcome the current financial challenges faced by several
states, would be subject to the states meeting a stringent 22-point
reform agenda called the Fiscal Sustainability Plan (FSP).
The statement disclosed that the FSP was
unanimously agreed by state governors during the National Economic
Council meeting held on May 19 and it encompasses a framework of reform
measures including the requirement to publish audited financial
statements and budgets, biometric and Bank Verification Number (BVN)
payroll review exercises to sanitise payroll costs, as well as limits on
recurrent expenditure levels.
Other conditions listed include the
requirement that states set and meet targets to enhance Internally
Generated Revenue (IGR), the establishment of Efficiency Units to reduce
overhead costs, privatisation of state-owned enterprises, domestication
of the Fiscal Responsibility Act and limitations on securing further
bank loans.
“On its part the federal government has
agreed to develop IPSAS-compliant software for states to use, and to
develop new bond issuance guidelines to ease access to the capital
market for states wishing to fund developmental projects.
“Disbursements will be conditional upon
states meeting their agreed targets and will be subject to monitoring
and evaluation by independent monitoring agents. States that fail to
meet the agreed reform targets will be excluded from further funding.
“The FSP mirrors the public financial
management reforms currently being pursued at the federal government
level and is expected to set the states on a path towards long-term
fiscal sustainability,” the statement added.
Continuing, the statement quoted the
Minister of Finance, Kemi Adeosun, to have also explained that the FSP
represents an important programme of reforms that will develop best
practice financial management across all tiers of government and will
improve transparency and accountability.
“We are determined to attain financial
discipline across government and implementing the FSP at state level
will ensure alignment. The focus on increasing revenue, which is not
limited to conventional taxes, but rather encourages states to explore
opportunities in areas such as agriculture and solid minerals, is in
line with our diversification objectives.
“The targets for cost management and
improved efficiency will deliver value for money and will yield long
term savings. Overall, we believe that the survival of state governments
is essential to the economic recovery of Nigeria, specifically their
ability to meet salary obligations,” she added.
In line with the federal government’s
resolve to reflate economic activities in the country, the Central Bank
of Nigeria (CBN) had last year disbursed a special intervention fund
totalling N338 billion to 27 states in the country. This was sequel to
President Muhammadu Buhari’s approval of a relief package designed to
enable states pay workers’ salaries and also salvage their economic
situation. Part of the relief package then was the CBN’s special
intervention fund to be offered to states in the form of soft loans to
be accessed solely for the purpose of paying the backlog of salaries.
The approval of the special intervention fund was sequel to the decision
by the National Economic Council (NEC) at its meeting of June 29, 2015,
requesting that the CBN, in collaboration with other stakeholders,
should appraise and consider ways of liquidating outstanding workers’
salaries owed by state and local governments.
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