States’ Cash Crunch: Govs Beg FG to Postpone $2.1 Billion Support Repayment, CBN Kicks
State governors on Thursday at the monthly meeting of the National Economic Council appealed to the Federal Government to postpone the repayment of the $2.1bn budget support facility to states which was scheduled to resume in May.
But the Governor of the Central Bank of Nigeria, Godwin Emefiele, kicked against the appeal and enumerated the technical challenges involved should there be a further postponement of the deductions.
The Senior Special Assistant to the Vice President on Media and Publicity, Laolu Akande, disclosed these in a statement issued at the end of the council’s meeting presided over by Vice-President Yemi Osinbajo.
Akande said the Vice President thereafter directed that a meeting be held where the issue would be properly considered and a decision reached.
For long, Nigerian states have been depending on federal allocations as a result of low Internally Generated Revenues.
The situation had been made worse with crash in revenues realised from the nation’s major export – crude oil.
As a result, most states had resorted to borrowing with a recent report by the Fiscal Responsibility Commission indicating that the subnational governments had overstepped their limits.
The report said, “It can be deduced that all the 36 states and the FCT exceeded the Debt Management Office threshold of 50 per cent.
“Lagos State accounted for the highest Debt-to-Total Net Revenue as at the end of 2019, with 712.94 per cent. Osun State came second with 650.94 per cent Debt-to-Total Net Revenue. While Cross River and Ogun States were third and fourth with 597.36 per cent and 402.30 per cent respectively.”
The statement read, “On the budget support facility, finance minister observed that the deductions for repayment by states are meant to resume in May.
“The governors however requested for an extension considering the economic challenges in the states.
“The central bank governor explained the technical challenges involved should there be a further postponement of the deductions.
“The Vice President then directed that a meeting be held soon after today’s NEC where the issue would be properly considered and a decision reached.
“The VP will chair the meeting and the governors will be represented by Governor Kayode Fayemi, while the finance minister and the central bank governor both of whom attended the meeting today will also participate.”
Akande said the council also received a presentation on the current status of water, sanitation, and hygiene services level across the country as revealed by the 2019 WASH National Outcome Routine Mapping survey jointly carried out by the Ministry of Water Resources and National Bureau of Statistics in collaboration with UNICEF.
He said the survey revealed among others that 28 out of 36 States plus FCT have urban water utilities out of which only 16 are functional and producing water for the people.
“The functional 16 state water agencies have a total number of 1,171 water works of which 41 per cent is operational,” he said.
He said the Minister of Aviation, Hadi Sirika, also made a presentation on National Aviation Infrastructure Development Plan.
The minister was quoted as listing his ministry’s key performance indicators to include concession of four international airports – Lagos, Abuja, Port Harcourt and Kano; implement a plan for effective maintenance and optimal use of all airport facilities across the country; and ensure and facilitate the establishment of a national carrier among others.
Akande said the council resolved that the minister should make available copies of the presentations to states so that the council would have a fuller understanding.
He said the council also received presentation on progress report on rail development from the Minister of Transportation, Rotimi Amaechi.
He quoted the minister as listing the key challenges to include inadequate funding, operational challenges, security and legal issues.
Akande added that the Minister of Finance, Budget and National Planning, Zaynab Ahmed, gave the update to council on the different accounts as of April 22 as Excess Crude Account – $72.41m; Stabilisation Account – N23. 3bn; and Natural Resources Development Account -N77.74bn.
NEC faults Obaseki, says no N60bn was printed
The council also said there was no truth in the allegation that the CBN printed N60bn to augment March’s federal allocation.
Edo State Governor, Godwin Obaseki, had made the allegation which had since been denied by the CBN; Minister of Finance, Budget and National Planning, Zainab Ahmed; and the Progressives Governors Forum among others.
Rising from its monthly meeting on Thursday, NEC which has all state governors and relevant ministers as members, claimed that the allegation was false.
The council’s resolution was made public in a statement by the Senior Special Assitant to the Vice President on Media and Publicity, Laolu Akande, titled ‘OVP Flash: No money was printed to shore up March allocation, NEC affirms’.
The statement read, “Having received presentations from the Minister of Finance, the Central Bank Governor, and the Nigerian Governors’ Forum, the National Economic Council has affirmed that there was no printing of N60bn or any other amount whatsoever to shore up allocation for the month of March as wrongly insinuated recently in the press.
“The governors, having critically reviewed the matter, took the position today (Thursday) at the meeting of NEC chaired by Vice President Yemi Osinbajo.
“Today’s meeting attended by many of the state governors, FCT minister and the Central Bank Governor also had in attendance the finance, transport, information, aviation and water resources ministers.
“The Minister of State for Budget and National Planning also attended.
“The council expressed satisfaction with clarifications made by the NGF represented by its chairman, Governor Kayode Fayemi of Ekiti State, finance minister, Hajiya Zainab Ahmed, and the Central Bank Governor, Mr Godwin Emefiele, on the alleged printing of N60bn by the Federal Government.”
Akande added that both the minister and the CBN governor stated to the council that the allegation of printing of money to augment allocation was outright false.
According to him, the NGF also supported the conclusion and NEC affirmed same as the highest constitutional body tasked with economic affairs in the country.
The presidential aide on the resolution of security concerns in parts of the country, said the council unanimously affirmed the unity of Nigeria and adding that it would adopt the report of the national town hall meeting on national unity and security held recently in Kaduna.
He said, “The council, while welcoming the outcome of the town hall meeting, urged all states to hold wider consultations across the country and report back to NEC the outcome of the meetings.”
After this, a national consensus would be reached on the recommendations which included the adoption of state police among other matters, he added.
Source : The PUNCH
Follow us on Twitter at @thesignalng
Copyright 2021 SIGNAL. Permission to use portions of this article is granted provided appropriate credits are given to www.signalng.com and other relevant sources.