The administration of President Muhammadu
Buhari is to reinburse state governments for
the claims of over-deduction for external debt
service arising between 1995 and 2002 as a
result of first line charge deductions from the
Federation Account Allocation Committee (FAAC).
The state governments made the submission to
the federal government in respect of the debt
service deductions having to do with the Paris
Club and multilateral debts.
Some states were said to have been
overcharged when Nigeria reached a final
agreement for debt relief with the Paris Club
in October 2005. The president however
directed that the claims be subject to
verification by the Debt Management Office
(DMO).
To this end, the ministry of Finance announced
that a team was established and given the
mandate to scrutinise and reconcile the
available records.
The brief for the team was also extended to
include a review of interim payments made under
previous administrations.
Festus Akanbi, spokesperson to Kemi Adeosun,
the finance minister, said in a statement that
work has commenced to resolve each state
government’s claim and that the exercise is
expected to take approximately 12 months.
“The exercise will be thorough, including a
complete reconstruction of records dating
back to the period in question,” the statement
said.
The statement said the federal government had
reached a conditional agreement to pay 25
percent of the amounts claimed subject to a
cap of N14.5 billion to any given state with the
balance to be revisited when fiscal conditions
improve.
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“Mr President’s overriding
concern is for the welfare of the
Nigerian people considering the
fact that many states are owing
salaries and pension, causing
considerable hardship.
Therefore, to ensure compliance
with the directive that a
minimum of 50percent of any
amount disbursed is dedicated to
this, funds will be credited to an
auditable account from which
payments to individual creditors
would be made. Where possible,
such payments would be made to
BVN linked accounts and
verified.
“Due to the fact that
reconciliation is still on-going
and the final outcome might
show an under or overstatement
of claims, an undertaken has
been signed by state governors,
declaring that in the event the
amount already paid exceeds the
verified claim, the surplus would
be deducted directly from the
State’s monthly FAAC
allocations.
“The total amount approved by
the president is N522.74 Billion
and is to be paid in batches. The
first batch of N153.01 Billion is
currently being processed for
release to 14 State Governments.
“The release of these funds is
intended to support the fiscal
stimulus programme of the
President Muhammadu Buhari
led administration to provide
direct stimulus through
Government spending.
“It is particularly aimed at
boosting demand at consumer
level and reversing the slowdown
in economic activity.”


Source
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