Nigerian govt to deduct N614bn bailout loans from states’ September allocations

President Muhammadu Buhari and Governors of the 36 States (Photo Credit:
President Muhammadu Buhari and Governors of the 36 States (Photo Credit:

The federal government will in the next two weeks begin the deduction of the N614 billion Budget Support Facility it gave to 35 sates, the Minister of Finance, Budget and National Planning, Zainab Ahmed, has said.

The minister disclosed this at the Public Consultation Forum on the draft 2020-2022 Medium Term Expenditure Framework in Abuja on Tuesday.

Mrs Ahmed also said that workers in Ministries, Departments and Agencies that fail to move to the Integrated Personal Payroll Information System (IPPIS) by October will not receive their salaries.

The IPPIS is an information Communications Technology (ICT) project initiated by the Federal Government for the payment of salaries to federal civil servants to improve the effectiveness and efficiency of payroll administration for MDAs.

The federal government gave the conditional budget support facility to the states through the Central Bank of Nigeria (CBN) in 2017.

It was to enable the states to meet their financial obligations to civil servants and pensioners.

The money was provided at a 9 per cent interest rate, with a grace period of two years.
PREMIUM TIMES reported how state governors have been lobbying to defray the repayment of the loan.

READ ALSO: Nigeria using three funding sources for key infrastructure projects – Official

The lobby, however, appears to have failed.

Mrs Ahmed said the repayment will be taken from the affected states’ allocations during the next Federation Accounts Allocation Committee ((FAAC) meeting coming up in a fortnight.

She said the refund is not going to be treated as revenue to be used to fund the 2020 budget.

It was a loan that was advanced by the Central Bank of Nigeria to the states, the minister said.

Because the payment was made by the CBN, the recovery process is for the loans to be deducted from the FAAC allocations of the states and remitted back to the CBN.

She said the process will not require a consideration of the fiscal strategy paper (FSP) implementation, but to ensure the states stayed on the path of fiscal sustainability.

“This will not be a condition for the deduction. We will deduct direct at source and remit to the CBN,” she said.

The minister revealed that the federal government is considering a review of the various incentives and waivers granted to investors and businesses.

Acknowledging the huge cost and losses to the government as a result of the incentives and waivers, the minster said the review is to commence with the pioneer status certificate issuance process.

She said it is difficult for the waivers to be removed overnight, considering that businesses had already taken investment decisions based on those incentives.

“There must be a period that should be allowed for the business to exit before new conditions are imposed.

“Government is currently reviewing the quantum of waivers to see which can be put back or removed to reduce the cost of government. Despite the cost, to encourage businesses and investors and make Nigeria competitive, some of the incentives are essential,” she said.


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