A civil society group has faulted the bailout package approved by President Muhammadu Buhari on Monday to help bankrupt states pay outstanding workers’ salaries.
The Centre for Social Justice criticized the use of the Nigeria LNG dividend to rescue the states.
Presidential spokesperson, Femi Adesina, had said the use of the $2.1 bn dividend by the NLNG was part of measures by the President to deal with the problem of unpaid public sector salaries in many states.
Mr. Adesina listed other measures to included a Central Bank-packaged special intervention fund that would offer between N250 bn and N300 bn financing to the states, in the form of soft loans to enable the states pay backlog of salaries.
The bailout also included a debt relief programme by the Debt Management Office (DMO) to help states restructure over N660 bn commercial loans and extend the duration of such loans, while reducing their debt-servicing expenditures.
However, the Centre for Social Justice said although the presidential gesture to the states on the surface appear good, a proper analysis of the legal and policy implications, shows it does not help in improving fiscal governance, particularly at the state level.
“In all the discussions between the President and the Governors that preceded this bailout package, there was no mention or acknowledgement by the governors of the inability of states to pay their workers and the parlous state of their finances,” Lead Director of the group, Eze Onyekpere, said.
Rather than blame the Federal Government under the immediate past president, Goodluck Jonathan, Mr. Onyekpere said the truth about the poor state of finances in the states remained a product of the fiscal irresponsibility of the governors who mismanaged their state finances.
President Buhari’s decision to order the sharing of the profits from investments in the NLNG, Mr. Onyekpere noted, was ill-advised, particularly at a time Nigeria was looking for finance for the construction of additional production trains of the plant as well as develop new LNG projects at Brass and Olokola.
“If the profits accruing to the Federation Account from NLNG had been properly managed and invested, the project would have gone beyond the present six trains, thereby laying a solid foundation for the country’s economic diversification,” Mr. Onyekpere said.
He also faulted CBN’s bailout fund to states without conditions, saying it was “nothing short of licensing fiscal rascality writ large”.
Section 41 of the Fiscal Responsibility Act, applicable to all States of the Federation (vide items 7 and 50 of the Exclusive Legislative List), he pointed out, prohibits borrowing for recurrent expenditure and payment of salaries, adding that the minimum that should have been expected should have been strict attachment to fiscal reform as condition for accessing the loan.
“It will be unconscionable for CBN to give public funds to be managed by a Governor, who has appointed tens of Special Advisers and Assistants; still maintaining a long convoy of cars for his entourage, maintaining an aircraft at state expense, or drawing hundreds of millions monthly on unaccounted security votes,” he stated.
The director described as “fiscal crime” to allow states access to bailout fund – where their accounts have not been audited for several years and no follow-ups on audit queries and findings; no biometric verification of the workforce to remove ghost workers.
He said the Federal Government should have ensured that states intending to access the CBN funds under-went a federally administered fiscal governance test and public finance management review to identify the loopholes that needed to be closed to avoid waste and abuse of state finances.
Rather than give an open access, he said funds should have been released in instalments over time when evidence of substantial progress and commitment by the states had been established.