The Minister of Finance, Mrs. Kemi Adeosun, on Monday doused the expectations of the 36 state governors on the further release of Paris-London Club refunds to the states, making it clear that any further payments was dependent on the current and projected cash flows of the federation.
She also said that the complete and final refunds would only be released and published after each state and the federal government have reconciled and agreed on the sums due.
She equally stated that the second and subsequent tranches would be tied to the outcome of the independent monitoring of compliance with the terms and conditions attached to the previous releases as agreed to between the federal and state governments.
The minister further reaffirmed the federal government’s commitment to publish all relevant information on the Paris-London Club refunds to the states.
The federal government’s position is coming on the heels of the deluge of calls for an inquiry into how the first tranche of the Paris-London Club refunds were expended by some states.
Adeosun, who expressed the administration’s commitment to publish relevant information on the Paris-London Club refunds, said the government deemed it necessary to address the issue.
In a statement issued by her Media Adviser, Mr. Festus Akanbi, the minister assured the public that the federal government has consistently complied with all extant rules and regulations in the disbursement of the Paris-London Club refunds to the state governments.
“The federal government’s disbursement process is transparent and targeted at the attainment of specific economic objectives. The inability of some sub-national governments to meet salary and other obligations was considered inconsonant with the federal government’s economic stimulus programme.
“Claims with regard to over deductions had been made to the federal government, consistently since 2005.
“The Debt Management Office (DMO) initially requested for a period of 22 months to complete the reconciliation and facilitate disbursement.
“However, President Muhammadu Buhari, considering the plight of salary earners and pensioners and the need to stimulate the economy, directed that the exercise be completed within 12 months,” the statement added.
According to the minister, Buhari also gave an express anticipatory approval for the release of up to 50 per cent of the claim of each state, pending final reconciliation.
She stated that the reconciliation was undertaken by the DMO, Office of the Accountant General of the Federation (OAGF) and the relevant state governments.
“Accordingly, the disbursements are staggered in batches and payments are only made when the claims of each state have been reconciled with the facts at the disposal of the federal government.
“Specifically, information was available that some states had been paid either in full or in part, under previous administrations. This necessitated a more detailed review for the states in question,” Adeosun clarified.
The release of the first tranche, representing up to 25 per cent of claims, being N522.7 billion, she added, commenced in December 2016.
Disbursement, she stressed, was subject to an agreement by state governments that 50 per cent of any amount received would be earmarked for the payment of salaries and pensions.
“In addition, each governor gave an undertaking that excess payments would be recovered from the Federation Accounts Allocation, if the final reconciliation found that the amount paid under the anticipatory approval exceeded that due.
“It is standard practice in the Ministry of Finance to undertake independent monitoring of compliance with the terms and conditions of funds released. This will be conducted in due course.
“To date, nine batches have been processed while some balances remain outstanding to the possible credit of a number of states.
“Given the foregoing, complete and final figures can only be released and published after each state and the federal government have reconciled and agreed on the sums due,” she said.
She recalled that at the National Economic Council meeting last Thursday, the president had directed her and Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, to commence the process of resolving the balance of the approved amount.
According to Adeosun, the overriding consideration for any further releases will be the current and projected cash flows of the federation, as well as the outcome of the independent monitoring of the compliance with terms and conditions attached to the previous releases.
She reaffirmed the commitment of the administration to publish all relevant information on the Paris-London Club refunds.
Several groups and individuals, including the Nigeria Labour Congress (NLC), have alleged that some states diverted the first tranche of the Paris-London Club refunds, and called for a probe of the state governors.
However, the Nigerian Governors’ Forum (NGF) on Sunday debunked the allegation.
The NGF said since the current leadership of the body stepped into the matter, which started as far back as 2005, nothing illegal had been committed in the entire process leading to the final disbursement to states of the first tranche of Paris-London Clubs repayment of the excess deductions from states’ coffers and the refund of their loans.
The governors also revealed that in the course of pursuing their refunds for the past 12 years, some states negotiated fees of between 10 and 30 per cent with consultants that they contracted to assist them with the recovery of the excess deductions from the states.
Indeed, a law firm – Edward and Partners – based in Nigerian and the United States, has written a petition to the National Assembly demanding that its fee of $86 million be paid for facilitating the recovery of $3.189 billion from the Paris-London Clubs.
But reacting to the revelation that some states entered into contracts with consultants to recover the funds for as much as 10 to 30 per cent, a former military governor of Kaduna State, Col. Abubakar Dangiwa Umar (rtd.), described the revelation as shocking and called on Buhari to suspend the release of the second tranche to the states.
In a statement Monday, he said: “It is now revealed that some state governors contracted consultants with fees ranging from 10 to 30 per cent to secure refunds from the Paris-London Clubs.
“With this shocking revelation, President Muhammadu Buhari should suspend his order to the Federal Ministry of Finance and the Central Bank of Nigeria (CBN) on the release of the second tranche of the refunds.
“It is also evident now that most of the earlier released funds were deployed for other purposes than the payment of salaries and pension arrears as directed by Mr. President.
“This impunity has got to stop.”