The Federal Ministry of Finance on Tuesday provided some clarifications on the Paris Club refund approved for the 36 states of the Federation.
A statement issued by the ministry’s Director of Information, Hassan Dodo, on the refund to the sub-national government recalled that the issue of Paris Club loan over-deduction had been a long standing dispute between the Federal Government and the State Governments, dating back to 1995 to 2002.
He stated further that 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), adding that the reconciliation commenced in November 2016.
Dodo confirmed that as an interim measure to alleviate the financial challenges of the States during the 2016 recession, the President had approved that 50 percent of the amounts claimed by states be paid to enable them clear salary and pension arrears.
Specifically, the Director disclosed that the refund was released between 1st December, 2016 and 29th September, 2017 as part of the Federal Government’s fiscal stimulus to ensure the financial health of sub-national governments.
According to him, the DMO led the reconciliation process under the supervision of the Federal Ministry of Finance.
Dodo clarified further that the final approval of US$2.689 billion was subject to some conditions, namely, salary and staff related arrears must be paid as a priority; commitment to the commencement of the repayment of Budget Support Loans granted in 2016, to be made by all states.
Others include clearing of amounts due to the Presidential Fertiliser Initiative; and 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.
He disclosed that it was agreed that payment of the approved amount was to be disbursed in phased tranches to the states.
