Financial crisis looms in states as FG insists on deducting N614bn bailout from FAAC allocation

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There is disquiet among state governors following the directive for repayments of the loans they received from the federal government between 2015 and 2017.

Federal government gave out the loans as bailouts during the financial crisis in the states.

Ministry of Finance has put the total indebtedness of the states to federal government at N614 billion. The money was advanced to the states under the tag of National Budget Support Loan Facility.

While announcing the directives that states should commence repayment last week, Minister of Finance, Mrs Zainab Ahmed, said each of the states would be required to refund a total of N17.5 billion.

Federal government is, therefore, putting together a committee comprising members of Nigeria Governors’ Forum (NGF), officials of Central Bank of Nigeria and Ministry of Finance to draw up modalities for the repayment.

The budget support loan facility was occasioned by the recession which arose in the wake of 2016, where state governments had issues with paying salaries of their workers and carrying out basic infrastructural maintenance.

The support, generally acclaimed as “bailout,” was given out on the condition that states strictly adhere to the guidelines of the payment of salaries of workers.

Investigations revealed that since the announcement by the minister for the repayment, state governments have been agitated and had been working out an exit strategy from the loan burden.

Efforts to speak with some of the governors and their commissioners have not been successful, but an aide to one of the governors in the south-west, who spoke on the condition that he is not named, said the governors would not be speaking on the matter individually but had agreed to tackle it collectively under the canopy of Nigeria Governors Forum.

“Nobody will talk to you on this matter as an individual, but there is a grave concern right now, knowing the financial conditions of the states,” he said.

“But what I can tell you, is that governors are holding a series of meetings, especially with Vice President Yemi Osibanjo. They are basically asking that they should be given more time to pay the loans.”

Another official close to the office of Chairman of NGF, Mr Kayode Fayemi, hinted that the governors “are jittery” following the announcement of the repayment of the loans.

“You know most of the governors are new and they inherited the loans,” he said. “We know government is a continuum, but you know how it feels when you just resumed office in May and you are asked to start paying such loans in August.”

The major concern of governors is that once the repayment commences, the funds may be deducted at source before the monthly allocation, at a time they are complaining that funds accruing to their states were not enough to meet their governance needs.

Director-General of the Nigeria Governors Forum, Mr

Asishana Okauru, confirmed during a telephone interview that the situation was creating serious concerns for the governors, who are unrelenting in finding a solution to the problem.

He said the governors are working out an exit strategy, but that he would not be able to make such public.

Okauru noted that what the federal government did in providing the loans was done in good faith, but as the realities of repayment stare the governors in the face, a reconciliation would be necessary to lighten the burden on the governors.

“They are thinking of the impact of the new minimum wage; they are thinking of the impact on the security situation in the country and their capacity to raise IGR; they are thinking of expenditure around health, education, innovation and all that,” Okauru said, while listing some of the concerns of the governors.

Okauru also confirmed that it was a matter of serious concern that some of the state governors are new and had just taken over the governance of their respective states.

He said these governors would need more time to settle down to deal with serious challenges, admitting, however, that it would be understood that government continues, regardless of who occupies it.

He said NGF was undertaking a series of meetings with stakeholders to ensure that a common ground was reached for the benefit of the parties.

“Remember that there are several platforms for all this. National Economic Council is the ideal platform for things like this and those discussions are ongoing right now,” he said.

“The governors seriously think there is a need for reconciliation and they are thinking of ways to ensure that it is a win-win situation at the end of the day.”

Although the governors had claimed they judiciously applied the support funds, investigations by Independent Corrupt Practices and Related Offences Commission(ICPC) showed some of the states had explanations to render on the manner they spent the funds.

The ICPC 2016 report alleged some states diverted funds, while others mismanaged the funds to the extent salaries were left unpaid after all.