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.