Bailout fund: Governors reject N252m monthly deduction

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Governors of the 36 states of the federation in have rejected federal government’s deduction of N252 million monthly repayment of the total N164 billion budget support facility it gave to state governments in the first term of this administration.
The governors also rejected the federal government’s decision to empathize with them by reducing the deduction to N162 million following its decision to extend the repayment duration from 20 to 30 months, saying it was still burdensome.
The federal government had on August 23, this year announced its plan to recover the facility, otherwise known as bail-out funds, which it had earlier given to the states which were grappling with financial crisis at the time, to assist them in paying their workers’ salaries.
However, three months after the take-off of the second term of the administration, the federal government announced its decision to recover the loans.
Making the announcement at the end of the National Economic Council (NEC) meeting of August 23, this year, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said each of the 35 states which took the loans would repay a total of N17.5billion to the coffers of the federal government through instalmental deductions from their monthly allocations.
She had said: “As at today, the budget support facility advanced by the federal government to states is a total sum of N614 billion and this is to 35 states. This means an equivalent of N17.5 billion per state.
“Council agreed to constitute a team of the Nigeria Governors’ Forum, Ministry of Finance and the Central Bank of Nigeria to finalise the modalities to commence repayment of this facility to the Central Bank.”
Whereas the federal government had initially resolved to make a monthly deduction of N252 million from the allocation of each state, it later opted to empathise with the governors by extending the duration for repayment from 20 to 30 months.
Following the extension, the monthly deduction of N252 million reduced to N162 million, but the governors were still dissatisfied with the reduction.
Briefing State House reporters at the end of yesterday’s NEC meeting presided over by Vice-President Yemi Osinbajo, Ahmed who was flanked by Governors Willie Obiano (Anambra), Dapo Abiodun (Ogun), Abdullahi Sule (Nasarawa), explained that the federal government had made monthly deductions of N252 million from state allocations in the months of September and October on the basis of the initial 20 months’ repayment arrangement.
She explained that following the outcry against the N252 million deductions, the federal government was compelled to extend the repayment schedule to 30 months, thus bringing monthly deduction down to N162 million.
However, she added that despite the 10 monthss’ extension, the governors were still protesting, saying against this backdrop, the Ministry of Finance, Budget and National Planning, the CBN will yet engage the states with the intention to further reduce the deductions.
“The budget support facility was initially for 20 months’ repayment period, and when we made the first deduction in September, the states had complained that the amount deducted, which was N252 million, was too harsh.
“So, since then, the Central Bank of Nigeria, who is the lender, has revised the condition to make the repayment period longer, and so, the new repayment period is 30 months. This means that the states will be paying monthly N162 million. But again, today (yesterday), the states still were not satisfied with the condition.
“So, we are expecting that the Federal Ministry of Finance, Budget and National Planning, CBN and the states will engage again with the view of having the CBN further revise the condition to reduce the monthly repayment burden,” Ahmed disclosed.
ENDS

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