The Federal Government on Tuesday said it had approved $2.68bn as final payment to states for the Paris Club Refund.
The amount was confirmed in a statement issued by Director of Information in the Ministry of Finance, Mr Hassan Dodo.
The explanation is coming amidst controversy that has trailed the payment of the sum of N13bn to Osun State.
There have been talks that the refund was made to empower the Osun State Government to successfully prosecute the September 22 governorship election in which All Progressives Congress candidate, Mr Gboyega Oyetola, is facing strong candidates from at least three other parties.
But reacting to the development, Ministry of Finance said in the statement that the money was being released to states in phases based on some conditions.
Some of the conditions are that salaries and staff-related arrears must be paid as a priority; there must be commitment by all states to the commencement of the repayment of budget support loans granted in 2016; and clearing of amounts due to the Presidential Fertilizer Initiative.
Another condition is commitment to clear matching grants from the Universal Basic Education Commission, where some states have available funds, which can be used to improve primary education and learning outcomes.
The statement read in part, “The issue of Paris Club loan over-deduction has been a long standing dispute between the Federal Government and the state governments, which dates back to the period of 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 Debt Management Office.
“This reconciliation commenced in November 2016. As an interim measure to alleviate the financial challenges of the states during the 2016 recession, the President had approved that 50 per cent of the amounts claimed by the states be paid to enable the states clear salary and pension arrears.
“This was released between the 1st of December 2016 and the 29th of September, 2017.”
It added, “This refund was part of the government’s fiscal stimulus to ensure the financial health of sub-national governments. DMO led the reconciliation process under the supervision of Federal Ministry of Finance.
“The payment of the approved amount is to be made in phased tranches to states.”