Buhari Can’t Account For N1.75trn Extra-Statutory Bailout To States – BudgIT

Budgit, in its policy brief on the state of Nigerian states, said bailout funds were dished out with no form of transparency observed by the current administration.

“First clear indicator that Nigeria’s States were teetering into financial ruin came when at least two-thirds of all 36 governors demanded a federal government relief package, due to their inability to pay salaries and benefits to civil servants for months”.

“In 2015, a Salary loan of about N338bn was disbursed to states. The term of the loan was 20-year and the purpose of the loan was to help states facing fiscal strain meet outstanding salary obligations. Interest rates of 9% approved by the Central Bank of Nigeria (CBN),” the BugdIT report read.

“This was swiftly followed by the N575bn restructuring programme bond. The federal government negotiated this debt package through the Debt Management Office to allow states convert high interest bank debt into a 20 year tenured debt with interest rates set at 14.83%.

“With the exception of Ogun state, 23 states were immediate beneficiaries. However, the actual sum disbursed was not made public. Again, In July 2015, the federal government remitted approximately N92.18bn to States from dividends worth $2.1bn paid to the centre by Nigerian Liquified Natural Gas Company (NLNG).

“Barely a year later, the sum of N7.85bn was also approved by the federal government to assist states with revenue short falls in January 2016 from the dividend remitted by NLNG.

“In July 2016, the federal government endorsed the allocation of N3.6bn from solid minerals savings to states as part of the routine monthly FAAC disbursements.

“A total of N117.3bn was also disbursed to states, amount taken from excess revenue generated from Petroleum Profit Tax (PPT). Ordinarily, this should go into the Excess Crude Account, but it was speedily distributed between the federal and state governments.

“In all, a total of N1.75tn has been disbursed to states as extra-statutory fund but little is known about how the funds had been spent. The latest amount released is the N522.74bn refund to states for surplus deductions of external debt servicing fees between 1995-2002.”

“It is observed that the Federal Government seems to have adopted a reductionist approach to the States; often basing its release of funds on a need to offset recurrent expenditure at sub-national level.

“To discontinue this tradition and ensure funds are used efficiently, the allocation, utilization and spending of public funds should be transparent, coordinated and discreet.”

BudgIT has therefore called for a comprehensive audit of the funds disbursed so far, warning that “failure to do this will mean President Muhammadu Buhari is once again presiding over a non-democratic government, one where ordinary Nigerians remain enslaved by the actions of a relentlessly insatiable ruling elite”.