Paris Club Refund: Nigerian govt gives conditions for payment of balance to states

The federal government on Tuesday gave conditions state governments have to meet to qualify for the payment of the balance $2.69 billion (about N823.5 billion @ N306.25/$1) Paris Club loan refund.

The Federal Ministry of Finance said in a statement by the its spokesperson, Hassan Dodo, said the conditions include that states must undertake to give priority to payment of workers’ salaries and staff related arrears in the utilisation of the refund.

Other conditions include a commitment by all states to the commencement of the repayment of budget support loans granted by the federal government in 2016, and commitment to clear all amounts due to the Presidential Fertiliser Initiative (PFI).

Also, the states are to show commitment to clear matching grants from the Universal Basic Education Commission (UBEC).

Some states have available funds with the commission which could be used to improve primary education and learning outcomes.

Mr Dodo who said the conditions were part of the clarifications the ministry was making on the Paris Club Refund, confirmed the payment of the approved amount agreed after reconciliation with the Debt Management Office (DMO) would be made in phased tranches to the states.

The reconciliation process was to be under the supervision of the Federal Ministry of Finance.

The Paris Club loan over-deduction is a dispute between the federal and the state governments between 1995 and 2002.

On assumption of office, President Muhammadu Buhari directed that the claims of over-deduction be reconciled formally and individually by the DMO.

The reconciliation exercise commenced in November 2016, when the finance ministry confirmed the country’s economy had already relapsed into technical recession.

To help the states cushion the negative impact of the recession, the president had approved the payment of 50 per cent of the amounts claimed by states as an interim measure to help them alleviate the financial challenges.

The release of the amount was based on the conditions that the state governments would utilise a large part of it for the payment of their workers salary and pension arrears.

Consequently, the payments were released to the states between December 1, 2016 and September 29, 2017 as part of the federal government’s fiscal stimulus to ensure the financial health of the states and local governments.