Kemi Adeosun, Minister of Finance

The Federal Government has lent N800 million each to 35 states through the Budget Support Loan Facility. Minister of Budget and National Planning, Senator Udoma Udo Udoma  disclosed this while briefing reporters at the end of yesterday’s  National Economic Council NEC meeting .

“The Accountant General reported to the council that approval has been received and CBN has been directed to pay N800m to each of the 35 states of the federation.

“Governors expressed appreciation to the Federal Government for the restoration of the Budget Support Loan Facility for July and August 2017.”

Lagos State however, did not apply for the funds. The loans will go towards payment of salary arrears and meeting other obligations.

What happened to previous funds provided ? 

Since the inception of this administration, the Federal Government has bailed out the 36 states three times with funds running into trillions of Naira. N522 billion was paid as the first tranche in November 2016, while the second tranche amounted to N516 billion.  The states are however yet to give a comprehensive account of how the bail out funds were spent, and in some cases have mismanaged them.

Bail outs can not be forever

While the bail outs may be necessary in order to keep governance at the state level from grinding to a halt, they are unsustainable, and indirectly encourage financial recklessness.  State governments must have a concrete plan towards raising internally generated revenue and making their states business friendly. Some of the states will also have to take hard decisions such as downsizing their workforce.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.