Paris Club Debt: Buhari blocks payment of 3rd tranche refund to states

Some states are yet to receive the third tranche of the Paris Club debt refund weeks after the release of the $2.69 billion (about N823.5 billion @ N306.25/$1) balance was approved because the president, Muhammadu Buhari, halted the disbursement, PREMIUM TIMES can authoritatively report.

On September 11, the federal ministry of finance announced conditions the states must fulfill before the refund could be paid to them.

Apart from prioritising the payment of workers’ salaries and staff related benefits, the states were also asked to show commitment to commence the repayment of budget support loans granted by the federal government in 2016.

Other conditions included commitments to clear all amounts due to the Presidential Fertiliser Initiative (PFI) as well as matching grants from the Universal Basic Education Commission (UBEC).

Days before she was forced to resign her appointment over the National Youth Service Corps (NYSC) exemption certificate forgery scandal, the former finance minister, Kemi Adeosun, had approved the disbursement of the refund to the states.

A reliable source close the finance ministry told PREMIUM TIMES on Thursday that the Central Bank of Nigeria (CBN) had actually acted on the former minister’s instructions, with some states acknowledging the money indeed dropped in their accounts.

The source, who asked not to be named as he was not authorized to speak on the issue, named Osun as the first state to have received the payment, apparently to help in settling three months’ salary arrears to workers in the run-up to the just-concluded governorship elections.

Other states that equally received the payment included Bayelsa and Benue.

While Bayelsa announced the receipt of the refund and its plans to pay the new minimum wage to its workers, Benue was said to have already drawn and spent about N3 billion of the payment from its account.

However, a top official in the presidency said no sooner had some of the states began to draw the money than another directive was issued to the CBN to immediately reverse the payment.

According to the official, who pleaded anonymity, because of the sensitivity of the matter, the directive to the CBN came from the president, as it appeared Mrs Adeosun did not receive presidential clearance before authorizing the final payment.

The official said the president was concerned about the conduct of the state governors in handling the Paris Club refunds, describing them as irresponsible.

In particular, the official said the president frowned seriously at the refusal of the governors to pay several months’ arrears of salaries, pension, gratuity and other allowances to their workers despite collecting two previous payments of the refund.

Also, the president had wondered why almost all the states were owing huge backlogs of their counterpart funding to the Universal Basic Education (UBEC).

“The inability of the state governments to pay their counterpart funding to UBEC has rendered most of them ineligible to access available grants to fix the education system in their states,” the source explained.

Sections 9 (b) and 11(2) of the UBEC Act require the 36 States and the Federal Capital Territory (FCT) Abuja to provide 50 per cent counterpart funding to the intervention fund to qualify to access the fund matched by the federal government’s contribution.

No access to UBEC fund

PREMIUM TIMES learnt that about 30 states are currently unable to access the over N40 billion UBEC fund as a result of non-compliance with the payment of their counterpart funding.

To enable the states have access to the grants, the president was said to have directed the finance ministry and the CBN to deduct the backlog of the counterpart funding, put at about N100 billion, from each State’s share of the Paris Club third tranche refund.

On payment of salaries and other benefits to workers, it was learnt the president directed each state government to submit a written status report and submit to the federal ministry of finance and the CBN.

The status report must state exactly where they are on the payment, in terms of how many months each of them were owing on their payment of salaries, pension, gratuity, and other allowances.

Besides, they must demonstrate a commitment to how they planned to utilize the current payment they are expecting to offset the outstanding arrears of the benefits to their workers.

Aware the president was not ready to shift grounds on full compliance with the conditions for the release of the refund, a finance commissioner from one of the states told our reporter on Thursday they have been scrambling since Tuesday to submit all the documents.

To show how serious he is taking the matter, the presidency official said the president has also ordered that the status report being submitted be cross-checked with the Nigerian Labour Congress to authenticate the payment claims by the states.

Equally, the NLC, both at the national and state levels, have been asked to send in a report to corroborate the submission by the states on the payment of their workers’ benefits.

To ensure the speedy disbursement of the funds, it was learnt that the various state governments pressurized the CBN governor, Godwin Emefiele, to effect the payment.

But, before traveling to New York on Tuesday to attend the United Nations General Assembly (UNGA), the CBN governor was said to have directed the state finance commissioners to liaise with the director in the CBN governor’s office department, Jerry Abuah, on the documentation.

Pending the CBN governor’s return to secure further directive from the presidency to proceed with the payment, the finance commissioner said Mr Abuah had asked them to provide further attestation to the earlier documentation they submitted about salary payment.

“Until each of the state signs, payment would not be made. That is where they are now in the process. That is why some states have circulating press statements to claim they have not yet received the payment. But, this is half-truth, because the money was actually released, and later reversed,” the source in the finance ministry said.