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Bailout, governors

Rescuing the bankrupt states

The Vanguard reported on Friday that the Federal government had suspended the at-source deductions from state allocations from loans obtained by these states and guaranteed by the Federal government of Nigeria. It is apparently a short-gun measure to stem the financial crisis in the states, and to enable them fulfill their payroll obligations and stabilize the economy. In principle this sounds good. But its implications are a little murky. Rescuing states from insolvency is an act of charity that breaks the law. As a matter of fact, it is an unfunded mandate. It is constitutionally a mandate that must be backed by the Legislature of the republic. Every action of government connected to the expenditure of federal funds must be covered in the finance act as enacted by the National Assembly.

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