Buhari Okays N413.7bn Bailout for FG, States-Tobi Soniyi and Jaiyeola Andrews

 

Muhammadu Buhari 

•  Directs CBN to package 300bn special intervention fund
•  DMO to restructure N660bn commercial loans 
•  FG, states, LGs to share $1.7bn from ECA
•  Funds to be released this week

 In his resolve to end the lingering crisis of unpaid workers’ salaries in the country, especially in several states of the federation, President Muhammadu Buhari has approved a comprehensive relief package designed to salvage the situation.

In addition to the direct cash bailout, the three tiers of government will be sharing $1.7 billion from the Excess Crude Account (ECA), effectively emptying the account meant to shield the economy from exogenous shocks.

Opening up on the assistance to be rendered to the states, a source in the presidency said the president approved a three-pronged relief package that would end the workers’ plight nationwide.

He said this entails: The sharing of about $2.1 billion (N413.7bn) in fresh allocation between the states and the federal government.
“The money is sourced from recent NLNG (Nigeria Liquefied Natural Gas) proceeds to the Federation Account, and its release was okayed by the president,” the presidency official explained.

The second measure, he said, is a Central Bank of Nigeria (CBN)-packaged special intervention fund that would offer financing to the states, ranging from between N250 billion and N300 billion.

This would be in the form of soft loans available to states to access for the purposes of solely paying the backlog of salaries, he added.
The third measure is a debt relief programme proposed by the Debt Management Office (DMO) which will help states restructure their commercial loans currently put at over N660 billion and extend the tenure of the loans to 15 years, thereby reducing their debt service obligations.

This third option, which was exclusively reported by THISDAY last week, would by extending the commercial loans of the states, make more funds available to the state governments which otherwise would have been removed at source by the banks.

The presidency official noted that the federal government would guarantee the extension of the loans for the benefit of the states.
A central bank official also informed THISDAY that the funds from the NLNG and ECA would be released this week to enable the federal, states and local governments offset the backlog of outstanding salaries immediately.

On the disbursement of funds from the ECA, he revealed that a meeting of the Federation Account Allocation Committee (FAAC) took place last night and was for the first time attended by the Governor of the CBN, Godwin Emefiele, in compliance with the directive by Buhari on the bailout plan agreed to at last week’s meeting of the National Economic Council (NEC), for the states and federal government.

At the FAAC meeting, Emefiele, the central bank official said, set the conditions precedent for the state Commissioners for Finance that their states would have to meet to access the special intervention fund, which will be disbursed in the form of soft loans to enable them pay outstanding salaries.

The governor was also said to have briefed them of the approval to restructure their commercial lines and his directive to the banks in the country to extend the tenure of the loans to 15 years.

Informed government sources also explained over the weekend that this package, which was considered at the NEC meeting, was designed specifically for workers of the states and federal government.

They explained that Buhari reviewed and approved the package in his bid to intervene and alleviate the sufferings of workers, some of whom have not been paid for over 10 months.

When contacted, the Special Adviser to the President on Media and Publicity, Mr. Femi Adesina, confirmed that indeed a special package was on the way for the workers.

He added that the president was deeply concerned about the plight of the workers who had been unpaid for many months.

In his speech while inaugurating the NEC last week, President Buhari asked the council, which is a constitutional advisory body to the president, to as a matter of priority consider how to liquidate the unpaid salaries of workers across the country, a situation he observed had brought untold hardship to the workers.

While the $2.1 billion from the NLNG proceeds paid into the Federation Account would be shared among the states using the revenue allocation formula, the CBN will also make available the special intervention fund to states and then negotiate the terms with individual states.
The bailout programme that has now been approved by Buhari is expected to go into effect this week, as the president was said to have directed that the release of the funds should be made this week to assuage the plight of thousands of Nigerian workers in the federal and state governments.

At the NEC meeting, the relief measures were extensively discussed between the state governors and top officials of the federal government including the CBN governor, and permanent secretaries from Ministries of Finance and Petroleum Resources.
Other agencies that were actively involved in the process included the DMO and officials from the Office of the Accountant General of the Federation.

Media reports last month said no fewer than 12 of the 36 states of the federation were facing difficult times, putting the salaries they owed their workers at approximately N110 billion, representing the salaries being owed by governments of 10 of the states of the federation.

They are Osun, Rivers, Oyo, Ekiti, Kwara, Kogi, Ondo, Plateau, Benue and Bauchi States.
However, informed sources said the Finance Ministry and the CBN may have pegged the amount needed to settle all the outstanding public workers’ salaries at about N250 billion.

There are also workers in the federal government’s employ whose salaries have been unpaid for months. This package is expected to address those cases also, said sources in the presidency.

In their comments on the bailout package, analysts monday said the measure would boost the disposable income of a good percentage of the Nigerian workers and thereby reflate the economy.

Meanwhile, the Permanent Secretary, Ministry of Finance, Mrs. Anastasia Daniel Nwobia, yesterday disclosed that the absence of ministers would not hinder the running of government.

Briefing State House correspondents after meeting with the president, Nwobia said she was invited to shed light on certain issues in the handover notes submitted to the new administration by her ministry under former Minister of Finance, Dr. Ngozi Okonjo-Iweala.

Asked if the absence of ministers would in any way affect the effective coordination of government affairs, Nwobia said: “I don't think it is an issue to bother about since government is a continuum.

“Even if you have political heads there, the engine room of the service are the civil servants and we have continued to do our work.”
Providing insight into her mission to the Presidential Villa and the nation’s finances, she said: “We are basically here to brief the president on the activities of the Ministry of Finance,” adding that “the state of Nigerian finances are okay. Our finances are still okay, though we are still going through the challenges of a reduced revenue stream to government, and this you know obviously is from oil.
“The price of oil that has dropped; it has significantly reduced the revenue stream to government. But we are working at other ways to see how we can shore up the revenue base, so that we will be able to meet our expenditure.”

Commenting on the payment of outstanding subsidy claims to oil marketers, Nwobia said: “We did not say that we will not pay subsidy. Like the former minister said, there is a liability on subsidies which is being verified by the CBN and the Budget Office of the Federation.
“The issue had to do with the forex differentials which they were claiming and this committee is looking into it. As soon as it is resolved, we will be able to pay the verified amount.”

Similarly, the Accountant General of the Federation, Ahmed Idris, disclosed that he had been mandated to share the money left in the ECA.
He said there would be a meeting of FAAC “and we are going to distribute as agreed and directed during the NEC meeting last week. And the position was very clear that what we met on the ground is what we are going to distribute”.

On how much was left in the ECA to be shared, Idris said it stood at between $1.6 billion and $1.7 billion.
“That is what we are going to distribute among the three tiers of governments: the federal, state and local governments based on the approved formula,” he said.

On his agenda to shore up the federation’s finances following his appointment, Idris explained that the general message by the president was very clear requiring all office holders to fall in line.

He said: “We shall focus on the prudent management of resources and identify alternative ways of generating revenue, which we are set to do and to manage the meagre resources we found very efficiently and effectively for the betterment of the economy.”

Culled from Thisday