We’ve Refunded N700bn To States For Infrastructure — FG

The Federal Government says it has refunded over N700bn to state
governments for the development of federal infrastructure across
all states of the federation.

The Federal Government said it made the refunds to the states
over the past six years.

The government said these in a titled ‘President Buhari
Administration at Six’ obtained from the Federal Ministry of
Finance, Budget and National Planning in Abuja.

Under the section on support to states that focused on
infrastructure loans and refunds, the government said it had made
‘more than N700bn in refunds for federal road projects embarked
upon by state governments’.

It further stated that the current regime had extended more than
N2tn in bailout packages to state governments to enable them meet
their salary and pension obligations.

This, it said, was especially in the face of dwindling oil
revenues in the first three years of the regime.

The government stated that the support came in the form of
Budget Support Facility of N614bn that was extended to the states
and Paris club refunds of $5.4bn.

It said other forms of support included loan restructuring for
facilities with Deposit Money Banks.

The government explained that in 2015, the Debt Management
Office restructured DMBs’ loans with a total value of N575.52bn for
23 states to reduce the debt service burden on the states.

“In exchange for their loans to state governments, the banks
were issued 20-year FGN Bonds at a yield of 14.83 per cent per
annum,” it stated in the document.

The government added that the restructuring exercise benefited
the states through reduction in the monthly debt service burden of
states from between 55 per cent to 97 per cent for various
states.

It said the beneficiaries also gained interest rate savings
ranging from three per cent to nine per cent per annum; longer
repayment period for the loans now converted into bonds; and,
freeing up of needed cash to run the machinery of government.

The Federal Government’s support to states was, however,
condemned by a former President of the Association of National
Accountants of Nigeria, Dr Sam Nzekwe, who argued that states must
grow their Internally Generated Revenues to augment their monthly
federal allocations.

He said, “This should not be encouraged because they take their
monthly allocation from the Federation Account. They should rather
intensify the collection of their IGRs and generate more.

“By the way, most of the governors are talking about true
federalism and restructuring, meaning that they will have to
develop most of the resources in their states. So if you can’t
generate funds, then your clamour for restructuring should be
reviewed.”

Nzekwe said the Federal Government should not always listen to
the states when they call for financial intervention, as this would
make the states look inwards on how to boost their revenue
generation.

The Federal Government says it has refunded over N700bn to state
governments for the development of federal infrastructure across
all states of the federation.

The Federal Government said it made the refunds to the states
over the past six years.

The government said these in a titled ‘President Buhari
Administration at Six’ obtained from the Federal Ministry of
Finance, Budget and National Planning in Abuja.

Under the section on support to states that focused on
infrastructure loans and refunds, the government said it had made
‘more than N700bn in refunds for federal road projects embarked
upon by state governments’.

It further stated that the current regime had extended more than
N2tn in bailout packages to state governments to enable them meet
their salary and pension obligations.

This, it said, was especially in the face of dwindling oil
revenues in the first three years of the regime.

The government stated that the support came in the form of
Budget Support Facility of N614bn that was extended to the states
and Paris club refunds of $5.4bn.

It said other forms of support included loan restructuring for
facilities with Deposit Money Banks.

The government explained that in 2015, the Debt Management
Office restructured DMBs’ loans with a total value of N575.52bn for
23 states to reduce the debt service burden on the states.

“In exchange for their loans to state governments, the banks
were issued 20-year FGN Bonds at a yield of 14.83 per cent per
annum,” it stated in the document.

The government added that the restructuring exercise benefited
the states through reduction in the monthly debt service burden of
states from between 55 per cent to 97 per cent for various
states.

It said the beneficiaries also gained interest rate savings
ranging from three per cent to nine per cent per annum; longer
repayment period for the loans now converted into bonds; and,
freeing up of needed cash to run the machinery of government.

The Federal Government’s support to states was, however,
condemned by a former President of the Association of National
Accountants of Nigeria, Dr Sam Nzekwe, who argued that states must
grow their Internally Generated Revenues to augment their monthly
federal allocations.

He said, “This should not be encouraged because they take their
monthly allocation from the Federation Account. They should rather
intensify the collection of their IGRs and generate more.

“By the way, most of the governors are talking about true
federalism and restructuring, meaning that they will have to
develop most of the resources in their states. So if you can’t
generate funds, then your clamour for restructuring should be
reviewed.”

Nzekwe said the Federal Government should not always listen to
the states when they call for financial intervention, as this would
make the states look inwards on how to boost their revenue
generation.