Governors will not get their Paris Club refund unless they give account of how they spent the first tranche .

Governors who did not judiciously spend the first tranche of the N523 billion Paris Club refunds will not get any further release, it was learnt on Friday.

While a probe of the utilisation of the funds across the states is underway to find and penalise erring governors, it has also been discovered that the Federal Government is facing a serious cash flow problem which has also forced it to put on hold further release of the Paris Club funds to the states.

President Muhammadu Buhari is said to have ordered that until a full account of how the first tranche was spent is given, none of the states should get any further release of the funds.

In addition to the problems associated with the utilisation of the first tranche, it was learnt on Friday that the Federal Government, based on a funding advice from the Ministry of Finance and the Central Bank of Nigeria (CBN), has put on hold the disbursement of the second tranche.

The Ministry of Finance had, during the week, stated that the release of the next tranche of the funds, among other things, was dependent on a satisfactory utilisation of the first tranche by each of the states and availability of funds.

A presidency source told Saturday Tribune, on Friday, that states found not to have used, at least, 50 per cent of the first tranche to pay salaries and pensions of their workers and retires would not get the second tranche.

“Information at the disposal of the government shows that many of the beneficiary states did not comply with the terms and conditions attached to the previous releases. A multi-layered probe is ongoing.

“Apart from the independent monitoring of the funds being carried out by a special team in the Ministry of Finance, the Economic and Financial Crimes Commission (EFCC) is also following its own leads. It is at the end of these probes that any of these governors found clean would get the second tranche”, a source in the presidency who asked not to be named told Saturday Tribune.

 

No money to pay

Another top source in the government introduced a more serious angle to the release of the second tranche with a declaration that “any governor waiting for the second tranche is waiting for Godot.”

The source, who also did not want his name mentioned, told Saturday Tribune that “there is no money to pay any state now, not this week, not next week, not even next month. Even if the audit is completed tomorrow, a further payment soon is not possible because the money is not there. The Federal Government currently faces cash flow problems.

“The president was put under pressure by governors when he returned from London.  That was why he instructed the ministry and the CBN to work on the second tranche. But the minister and the CBN governor have advised that it is not feasible for now.

“Check the report on the latest FAAC. Revenues are dropping. FIRS can’t meet target, same goes for Customs etc. That has made further payment of the Paris Club refunds unrealistic,” he declared.

 

We’re transparent in previous disbursement – Minister

On Monday, the Minister of Finance, Kemi Adeosun, in a statement, said that the Federal Government has consistently complied with all extant rules and regulations in the disbursement of the Paris Club refunds to state governments.”

She disclosed, among others, that: “The Federal Government’s disbursement process is transparent  and targeted at the attainment of specific  economic objectives. The inability of some sub-national governments to meet salary and other obligations was considered inconsonant with the Federal Government’s economic stimulus programme.   Claims with regard to over deductions had been made to the Federal Government, consistently since 2005.

“The Debt Management Office (DMO) initially requested for a period of 22 months to complete the reconciliation and facilitate disbursement.

“However, President Muhammadu Buhari, considering the plight of salary earners and pensioners and the need to stimulate the economy, directed that the exercise be completed within 12 months.

“In addition, Mr President gave an express Anticipatory Approval for the release of up to 50 per cent of the claim of each state, pending final reconciliation.

“That reconciliation is undertaken by the DMO, Office of the Accountant General of the Federation (OAGF) and the relevant state governments.

“Accordingly, the disbursements are staggered in batches and payments are only made when the claims of each state have been reconciled with the facts at the disposal of the Federal Government.

“Specifically, information was available that some states had been paid either in full or in part, under previous administrations. This necessitated a more detailed review, for the states in question.

“The release of the first tranche, representing up to 25 per cent of claims, being N522.7 Billion, commenced in December 2016. Disbursement was subject to an agreement by state governments that 50 per cent of any amount received would be earmarked for the payment of salaries and pensions.

“In addition, each governor gave an undertaking that excess payments would be recovered from the Federal Accounts Allocation (FAAC), if the final reconciliation found that the amount paid under the Anticipatory Approval exceeded that due.

“It is standard practice in the Ministry of Finance to undertake independent monitoring of compliance with the terms and conditions of funds released. This will be conducted in due course.

“To date, nine batches have been processed, while some balances remain outstanding to the possible credit of a number of states.

“Given the foregoing, complete and final figures can only be released and published after each state and the Federal Government have reconciled and agreed on the sums due.

“At the National Economic Council (NEC) meeting on Thursday March 16, 2017, President Muhammadu Buhari instructed the Minister of Finance and Central Bank Governor to commence the process of resolving the balance of the approved amount.

“The overriding consideration for any further releases will be the current and projected cash flows of the Federation as well as the outcome of the independent monitoring of the compliance with terms and conditions attached to the previous releases.”

The Minister, in the statement, reaffirmed what she called “the commitment of the administration to publish all relevant information on the Paris Club refunds.”

Presidential spokesman, Femi Adesina, told Saturday Tribune in a telephone interview on Friday that the situation of things on the disbursement of the second tranche “is as contained in the statement issued by the Minister of Finance on Monday.”

 

FG should monitor states —Erubami

Meanwhile, President of the Nigeria Voters Assembly (a human rights and pro-democracy group), Comrade Mashood Erubami, has urged both the federal and state governments to use the N523 Billion Paris Club refunds on the payment of salaries and pensions.

Erubami, in a statement on Friday, also described as appropriate and considerate the directive by the Federal Government that state governors should use the refund to defray unpaid staff salaries and pensions.

“Making sure that state governments do not embark on misapplication of the money is the collective duties of the federal and receiver state governments, civil society and labour groups to set the conditions for the prudent spending of the money so as to prevent governments from looking for future bailouts to pay salaries and pensions,” he said.