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FG gives states conditions to access $2.689bn Paris Club refund

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FG gives states conditions to access $2.689bn Paris Club refund

For a state to qualify for accessing the last tranche of Paris Club refund of $2.689 billion, it must fulfill key conditions, which include payment of salary and staff related arrears, the Federal Government declared yesterday.
Such states, in addition, must show a commitment to the commencement of repayment of Budget Support Loans granted in 2016.

Director of Information, Federal Ministry of Finance, Mr. Hassan Dodo, in a statement, stated that the Federal Government would commence phased payments of the refund to the states once the condition and several others were met.

Other conditions to be met before a state could access the last tranche include, clearing of amounts due to the Presidential Fertiliser Initiative and Commitment to clear matching grants from the Universal Basic Education Commission (UBEC) where some states have available funds, which could be used to improve primary education and learning outcomes.

“The DMO led the reconciliation process under the supervision of the Federal Ministry of Finance. The final approval of $2.69 billion is subject to some conditions.

“Salary and staff related arrears must be paid as a priority. Also commitment to the commencement of the repayment of Budget Support Loans granted in 2016 must be made by all states.
“Furthermore, they must clear amounts due to the Presidential Fertiliser Initiative and make commitment to clear matching grants from UBEC.

“This is in cases where some states have available funds which could be used to improve primary education and learning outcomes,” Dodo said.
Despite two tranches of Paris Club refund received by states, many states are burdened with backlog of salaries and pension arrears. Osun, Nasarawa, Kogi, Benue, Ekiti, Kwara top indebted states.

It will be recalled that the issue of Paris Club loan over-deduction had been a long-standing dispute between the Federal Government and the state governments, which dated back to the period of 1995 to 2002.

In response to the dispute, President Muhammadu Buhari directed that the claims of over-deduction should be formally and individually reconciled by the Debt Management Office (DMO). This reconciliation commenced in November 2016.

As an interim measure to alleviate the financial challenges of the states during the 2016 recession, the President had approved that 50% of the amounts claimed by states be paid to enable the states clear salary and pension arrears. This was released between December 1, 2016 and September 29, 2017. This refund was part of the government’s fiscal stimulus to ensure the financial health of sub-national governments.

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