Okonjo-Iweala blocks banks from funding states – Fashola

Minister of Power, Works and Housing, Babatunde Fashola. Photo credit: Sun Newspaper

The Peoples’ Democratic Party-led federal government’s “uncoordinated and inconsistent” management of fiscal and monetary policy levels has exacerbated the nation’s economic problems, Babatunde Fashola, the Lagos State governor, has said.

While appearing before the state’s lawmakers Tuesday to push for an amendment to the 2015 Appropriation Law on Tuesday, Mr. Fashola said that his administration’s rigorous thinking had protected Lagosians from the PDP’s “amateurish” management of the national economy.

“Today the Honourable Minister for Finance, if any honour still attaches to her actions, has stopped Nigerian banks from funding state governments because of elections, as if the needs of the people for roads, healthcare, drugs, education and security has stopped,” Mr. Fashola said.

“She has insisted that in spite of individual appraisals of each bank by their credit committees, all state request for funding by banks must be approved by her Ministry.

“To the best of my knowledge, she has not granted any of the requests submitted to her for approval in her new coordinating role as the retail banker for the Nigerian economy.”

The Lagos State House of Assembly passed the 2015 budget six weeks after it was presented by Mr. Fashola.

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The N489.69 billion budget was passed as it was proposed by the governor.

On Tuesday, Mr. Fashola told the law makers that the fall in global oil prices which had led to a significant reduction in revenues accruing to the Federation Account, had led to a decreased allocation from the federal government.

According to the governor, Lagos State’s share from the Federation Account had fallen from a monthly average of N11.05 billion in 2014 to the present N10.34 billion.

In February, the state recorded a 14 per cent decline in federal allocation compared to the previous month.

Mr. Fashola also told the lawmakers that the state’s internally generated revenue fluctuates from month to month.

“In 2014, Gross Revenue (IGR and FAAC) performance was 86 per cent (2013 – 91 per cent). In actual fact, our Revenue performance over the past years has never achieved 100%,” said the governor.

“However, the method of disbursement of funds to certain MDAs as First Line Overhead Cost as contemplated in Section 4 of the Lagos State 2015 Appropriation Law is based on 100% revenue performance. This assumed revenue performance has never been achieved in reality.

“In the light of the foregoing, I consider it expedient to advert the attention of the Honourable Speaker and the Distinguished Members of the House to this salient issue and to request a slight amendment to the 2015 Appropriation Law as it affects funds disbursements to the six (6) MDAs specifically listed to receive 100 per cent of their respective budgeted overhead costs on 12 equal monthly instalments to a more appropriate Consolidated Revenue Fund (CRF) performance-based methodology, that is tied to actual revenue performance.

“This modification shall also be applicable to other MDAs as relevant including the Lagos State Internal Revenue Service (LIRS), irrespective of the level of revenue generated.”

Mr. Fashola noted that the State Executive Council at its sitting on March 2nd, unanimously passed a resolution approving the adoption of the Revenue-Based Disbursement methodology in respect of Overhead Cost disbursements, pursuant to an amendment of the 2015 Appropriation Law by the House of Assembly.

He further urged the lawmakers to note the declining revenue performance at national level, in particular the extant macro-economic condition of the nation, its impact on the revenue accretion to the three tiers of Government and the realities of the State’s Revenue performance.

“I therefore crave the indulgence of this Honourable House to consider the proposed amendment(s) to the 2015 Appropriation Law and pass them into law,” he said.

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