The Federal Government has declared its readiness to recover N614 billion budget support (bail-out fund) given to states, as a committee to facilitate the recovery is already being constituted.
The Minister of Finance, Budget and National Planning, Zainab Ahmed reportedly briefed State House correspondents at the end of the National Economic Council (NEC) chaired by Vice President Yemi Osinbajo.
The Details: Having presented an update to the Council on the budget support facility, Ahmed disclosed that each of 35 states benefiting from the facility will pay back the equivalent of N17.5 billion.
“As at today, the budget support facility advanced by the Federal Government to the states is a total sum of N614 billion and this is to 35 states. This means an equivalent is N17.5 billion per state.
“Council agreed to constitute a team of the Nigeria Governors Forum (NGF), Ministry of Finance and the Central Bank of Nigeria (CBN), to finalize modalities to commence repayment of this facility to the Central Bank” Ahmed stated.
Stabilization Fund: Speaking further, the minister updated the Council on the activities of the Ad-Hoc Committee the stabilization Fund account of the federation.
“The Stabilization Fund Account which has a balance of N21,729 billion and Natural Resource Development Fund which has N95,896 billion,” she disclosed.
Ahmed also made a presentation on the Medium-Term Expenditure Framework and Medium Term Strategy Paper, stating that the presentation was to get inputs and recommendations from the Council for further presentation to FEC for approval and implementation. However, the minister stressed the need for more diversification to boost inclusive growth.
On the side-line, the vice President, Professor Yomi Osinbajo had previously spoken on how the current administration had in the last three years gave out close to N1.1trillion to states through loans, bailouts and Paris Club refunds.
The Bottom Line: As disclosed in an earlier publication, the minister has warned that Nigeria is on the edge of a financial crisis, and adequate measures are required to reverse the current trend.
While the individual state is still struggling to chart a course in meeting financial obligations in terms of the minimum wage, the federal government also appears strained and is ready to slug it out with the state governors.
Involving the Central Bank in the recovery panel suggests one thing that the federal government is set to pounce on states monthly allocation to recover its funds, which may cause a huge set back to several states.