The implementation of the N300 billion special intervention fund approved by President Muhammadu Buhari as bailout for cash-strapped state governments has started in earnest, according to the Presidency.
State governors had been expressing worry that they were yet to assess the fund, which is why they were unable to offset outstanding salaries of workers in their employ.
However, the Office of the Vice-President, Yemi Osinbajo, which is coordinating the relief package, announced on Monday that state governments would start benefiting from the special intervention fund of between N250 billion and N300 billion “in a matter of weeks.”
Senior Special Assistant (Media and Publicity) to the Vice President, Laolu Akande, in a press statement in Abuja, disclosed that meetings were being held between members of the Federation Account Allocation Committee (FAAC) and the Central Bank of Nigeria (CBN) on the one hand, and between the CBN and commercial banks on the other hand, over the fund and the President’s debt relief programme for the states.
“Such meetings are reviewing loan profiles of the states, issues around restructuring of existing loans, including time span, and reconciling the figures.
“Already, it has been agreed that existing state loans be restructured for 20 years, and, regarding the bond option, the rates to be applied would be market-based but with a cap to make it affordable.
“Within weeks from now, the states are expected to start benefiting from this two other parts of the presidential intervention,” Akande said.
He recalled that the presidential relief package was in three parts: ?The sharing of about $2.1 billion in fresh allocation between the states and the federal government. The money was sourced from recent LNG proceeds to the federation account, and its release okayed by the President; a CBN-packaged special intervention fund to the tune of about N300 billion that will offer financing to the states. This would be a soft loan available to states; and a debt relief programme by the CBN and the Debt Management Office, which would help states convert their commercial bank loans to bonds and restructure such loans by extending their life span thereby reducing the debt-servicing expenditures of the states.
Akande noted that the intervention offered by Buhari brought the financial muscle of the federal government to bear on behalf of the states, thus guaranteeing the elongation of the loans.
“Besides, the availability of the $2.1 billion from LNG, which has now been shared to the states was made possible because President Buhari set a new fiscal standard and tone that all monies generated should go to the federation accounts. Before that constitutional standard was upheld by the President, LNG dividends were going to other NNPC-designated accounts.
“None of the three parts of this intervention would have been possible without the creativity and approval of President Buhari. It should be noted that the backlog of the salaries in some of the states went back several months before the President took office.
“To date, the states have now drawn from the LNG taxes and dividends totaling $2.1 billion, besides a second sharing from the federation account, the regular monthly allocations, a sum of over N518 billion last week,” he said.
Akande disclosed that state governments have been advised during a meeting of the National Economic Council (NEC) to take steps to avoid a similar financial crisis in the future.
These include making the payment of salaries a first-line charge, increasing internally generated revenue, cleaning up payroll to eliminate ‘ghost workers,’ and functional debt management offices. – Daily Independent.
