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FG gives conditions for fresh $2.7bn Paris Club refund to states

By Emma Ujah, Abuja Bureau Chief

ABUJA—The Federal Government has given fresh conditions to be fulfilled before another round of $2.689 billion Paris Club refund would be paid to state governments.

The Federal Ministry of Finance said in Abuja, yesterday, that the conditions included payment of salary and staff-related arrears as a priority and commitment to the commencement of the repayment of Budget Support Loans granted in 2016.

Other conditions, it said, were clearing of amounts due to the Presidential Fertiliser Initiative, as well as commitment to clear matching grants from the Universal Basic Education Commission, UBEC, where some states have available funds which could be used to improve primary education and learning outcomes.

The issue of Paris Club loan over-deduction had been a long-standing dispute between the federal and state governments which dated back to 1995 to 2002.

In response to the dispute, President Muhammadu Buhari directed that the claims of over-deduction should be formally and individually reconciled by the Debt Management Office, DMO. This reconciliation commenced in November 2016.

However, as an interim measure to alleviate the financial challenges of the states during the 2016 recession, the President had approved that fifty percent of the amounts claimed by states be paid to enable them clear salary and pension arrears.

The Federal Government had earlier released about N766.54 billion in two tranches to the states. N522.74 was initially released to them, followed by another N243. billion.

The releases were conditional upon a minimum of 75 percent being applied to the payment of workers’ salaries and pensions for states that owed salaries and pension.

However, the governors largely ignored the federal government directive that the bulk of the funds be used to settle salaries and pension arrears.

The government said the funds were was part of its fiscal stimulus to ensure the financial health of state governments.

 


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