…Sets stringent conditions to access funding
By Michael Eboh
The Federal Government, yesterday, said it is finalizing a conditional Budget Support Facility to provide financial relief to state governments based on the states meeting a set of stringent fiscal conditions.
The Finance Ministry, in a statement in Abuja, said the facility is aimed at providing support to the states to help them overcome their financial challenges.
The Ministry of Finance said the states would only be able to access the facility if they meet a 22-point reform agenda called the Fiscal Sustainability Plan (FSP) approved by state governments and the National Executive Council, last month.
According to the Finance Ministry, the FSP encompasses a framework of reform measures including the requirement for the states 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 reforms, the Ministry said, will require states to 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 Ministry said the Federal Government has agreed to develop International Public Sector Accounting Standards, IPSAS, compliant software for states to use, while it would also develop new bond issuance guidelines to ease access to the capital market for states wishing to fund developmental projects.
The Ministry of Finance said disbursements of the relief packages would be conditional upon states meeting their agreed targets and would be subject to monitoring and evaluation by Independent Monitoring Agents.
It said states that fail to meet the agreed reform targets will be excluded from further funding, adding that he 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.