FG borrows to support states – Kemi Adeosun

FG borrows to support states – Kemi Adeosun
April 21 21:46 2016

*Says economy can’t be run on austerity

*Excess Crude Account stands at $2.3bn

[T]he Minister of Finance, Mrs. Kemi Adeosun said yesterday that the federal government had been borrowing to support state governments to enable them meet up with their obligations including payment of workers’ salaries.

Addressing State House correspondents after the National Economic Council (NEC) meeting in Abuja, Adeosun said deductions on loans given to the states by the federal government would be suspended for the month of April to enable them pay salaries.

She said the deferral would be extended for more than one month after the financial profile of the states was examined, adding that the decision to grant deferral to the states was borne out of the need to put money into the pockets of citizens so as to stimulate the economy.

She said the current status of the federation account is N299 billion, the lowest in the history of the country following fall in the price of oil in January and February this year.

She said the federal government was aimed at ensuring that state governments are supported through this difficult period.

She reiterated that the federal government was‎ very committed to stimulating the economy having recognised that the ‎ability of states to meet salary obligations was a very important part ‎of getting the economy moving again.

The minister said state governments have promised to ‎submit their ‎financial ‎data that would allow the federal government to module and predict how much support in terms of loan deferrals it can give to them.

She said: “On the update of the financial situation of the states, it was discussed extensively that currently the federation account receipts are among the lowest that has been seen in recent memory. We are looking at N299billion this month and that is because of the very low oil prices that was recorded in January and February.

“If you remember oil prices went as low as $28 and $31and of course that has led to a very low federation account as a result of which I approached the President and the governors that we defer the loan deductions from the federation account entitlement.

“The aim of this is to ensure that we support them through this difficult period to be able to meet salary obligations. The government is very committed to stimulating the economy and recognises the ability of states to meet salary obligations is a very important part of getting the economy moving again. To that end the President approved that deferral.

“The states have been asked to submit financial data that would allow us to module and predict how much support in terms of loan deferrals we might need to give just to get through this period until the economy recovers.

“I need to emphasize that it is not a bail out but a deferral, postponement of deductions just to allow the states to have the cash that they need to meet their salary obligation. I am very pleased to announce that all the governors endorsed the request to provide financial data, to work on biometric and other initiatives to cleanse out fraudulent entries on their payroll, you may call them ghost workers but it is being done at state levels very aggressively and the
efficiencies that state governors have already committed to, they have all endorsed those things as part of this support that we are trying to put in place.”

Also speaking, Governor Tanko Umaru Al-Makura said the issue of power generation and distribution also dominated discussion at the council meeting, stressing that the council has approved the reconstitution of the board of Niger Delta Power Holding Company (NDPHC).

“NEC reconstituted the Board of the Niger Delta, Power Holding Company, (NDPHC), which you know is to facilitate effective distribution across the country. There was a unanimous acceptance of the recommendations and reconstitution of the board to include one governor from each of the six geopolitical zones.

“For the North Central Zone, we have Plateau to represent: for the North East zone, we have Adamawa governor; North West, we have Kebbi State; South East, we have Anambra; South West we have Lagos and South South, we have Edo. The committee has since been inaugurated by the Vice President,” he said.