Friday, 17 June 2016

Five States Meet Conditions to Access N90bn Loan: Gov. Udom Emmanuel

Reports have reached us that the federal government on Thursday said that five states had met the 22 stringent conditions it stipulated for the 36 states of the federation seeking to draw from the N90 billion budget support loan facility in order to help them meet their obligations.

Akwa Ibom State Governor, Mr. Udom Emmanuel, who disclosed this while briefing State House correspondents at the completion of the National Economic Council (NEC) meeting held at the Presidential Villa in Abuja, said the loan would attract  a nine per cent interest rate.

He however said that one state had declined to access the loan, but did not disclose the identity of the five states that had met the criteria to access the loan, nor the one that turned it down.
However, a presidency source who was privy to the deliberations at the council meeting said Lagos was the state that turned down the loan.

The source added that the deadline for the submission of the documents by the states interested in the facility is Monday and was not sure that just five of them had qualified for the loan.
“I don’t know why the Akwa Ibom governor said five states had met the criteria for the loan. May be he is referring to those who have submitted their documents to the Ministry of Finance already, but the ministry is still expecting others to do so by Monday which is the deadline for the submission of their documents.
“As you know, they also have to get the approval of their state assemblies before applying for the loan, so I expect that more applications would pour in between now and Monday.

“What I know for certain is that only Lagos State has said it is not interested. Also Anambra has a policy of not taking loans, so the ministry might not hear from the state, otherwise, it is wrong to say that only five states have met the criteria when the finance ministry is still expecting their applications and has not started evaluating them,” the presidency source informed THISDAY.
According to Emmanuel, the loan will be disbursed after the next meeting of the Federation Account Allocation Committee (FAAC).

Udom said it was not compulsory for states to access the facility but was a lifeline made available to them as a result of the economic crunch that has hit the country today.
He said: “It is just to make this available, it is not compulsory. What is important is, people have access to a lifeline? You see what is happening today is not peculiar to Nigeria as a country, you know the impact of the fall in crude oil price that has actually impacted oil producing countries like Nigeria.
“What we are looking are the solutions, we must provide a lifeline for people to survive and to move on. I don’t think it is too much for the government to do.”

This is the third in a series of lifelines provided by the federal government to help states to meet their obligations, including the payment of salaries of civil servants in the states.
President Muhammadu Buhari had in July last year approved a N804.7 billion intervention package to help bankrupt states pay salaries. A repayment plan was also worked out on how the states would meet those obligations.
Also, the federal government had deferred up to N10.9 billion obligatory repayments due from states for April this year in respect of their restructured bailout loan obligations.

Last Tuesday, it announced a N90 bil­lion bond for the states with 22 stringent conditions attached to it.
The conditions are con­tained in its Fiscal Sustain­ability Plan (FSP) Fiscal Framework for Sub-Nation­al Governments (States) in Nigeria which the Minister of Finance, Mrs. Kemi Adeosun, released at a stakeholders’ meeting attended by the 36 states Com­missioners for Finance.

The conditions followed a report by the Inde­pendent Corrupt Practices and Other Related Offences (ICPC) which showed that most of the states had diverted the bailout funds earlier given to them.
Emmanuel also stated that the federal government owed the states for federal projects executed by them and a reconciliation of the accounts between states and the federal government was ongoing.

He explained that while the reconciliation was ongoing, states should have access to funds to address their needs. This, he said, explained the rationale behind the N90 billion facility.
He said: “It doesn’t actually mean that states which will take this money do not have something acruable also from the federal government, pending the time we reconcile our books.

“The federal government may have some balances to settle the state government but in the meantime while we are awaiting for the reconciliation to be concluded, we had to open the window so we can have access to liquidity and implement our 2016 budgets, I think that was the whole idea.”
He said the Minister of Finance reported to the council that the balance in the Excess Crude Account (ECA) as at June 15, 2016 stood at $2.261 billion

He said that the minister also informed the council that the full report on the forensic audit instituted on the revenue accruals into the NNPC and other revenue generating agencies would be made available to them when it is ready.