Updated: Adeosun signals Paris Club refunds not possible until cash flows improve

Updated: Adeosun signals Paris Club refunds not possible until cash flows improve

The ministry of finance signalled on Monday that the Federal Government may not be able to make further Paris Club refunds to the states until government’s cashflows improve, contrary to wide expectations that disbursements would commence soon.

At the National Economic Council meeting last week, President Muhammadu Buhari had instructed the Minister of Finance and Central Bank Governor to commence the process of resolving the balance of the approved amount.

“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,” Festus Akanbi, media adviser to finance minister, Kemi Adeosun, said in a statement.

Adeosun said it was necessary to address the issue of Paris Club Refunds as she assured the public that the Federal Government has consistently complied with all extant rules and regulations in the disbursement of the Paris Club refunds to State Governments.

According to her, the release of the first tranche, representing up to 25 percent of claims, being N522.7 billion commenced in December 2016.

“Disbursement was subject to an agreement by State Governments that 50% 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 Federal Accounts Allocation (FAAC), if the final reconciliation found that the amount paid under the Anticipatory Approval exceeded that due,” she further explained.

“The Federal Government’s disbursement process is transparent and targeted at the attainment of specific economic objectives.”

The minister explained that the inability of some sub-national governments to meet salary and other obligations was considered inconsonant with the Federal Government’s economic stimulus programme, as she confirmed that claims with regard to over deductions had been made to the Federal Government, consistently since 2005.

According to her, the Debt Management Office (DMO) initially requested for a period of 22 months to complete the reconciliation and facilitate disbursement.

But, President Buhari had considered the plight of salary earners and pensioners and the need to stimulate the economy and had directed that the exercise be completed within 12 months.

The President also gave an express Anticipatory Approval for the release of up to 50% of the claim of each state, pending final reconciliation.

“That reconciliation is 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,” she further explained.

Meanwhile, some states were being paid either in full or in part, under previous administrations, according to available information which necessitated a more detailed review, for the states in question.

She said the ministry of finance would in due course undertake independent monitoring of compliance with terms and conditions of funds released.

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.

Onyinye Nwachukwu

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