The Federal Government has spelt out 22 stringent conditions states must fulfill to enable them benefit from the N90 billion loan set aside for states facing financial difficulties.
The Minister of Finance, Kemi Adeosun, had on Tuesday said the loan will cover a period of one year and will be extended to the state governments after they meet 22 stringent conditions put together under the fiscal sustainability plan.
Speaking to journalists after a meeting with state’s commissioners of finance, the minister said the loan is in two tranches of 50 billion Naira for three months and 40 billion Naira for nine months.
Majority of the states have struggled to meet their financial obligations despite a July 2015 Central Bank of Nigeria-packaged special intervention fund that doled out between N250 to N300 billion in the form of soft loans to enable the states pay backlog of salaries.
The states also enjoyed a debt relief programme designed by the Debt Management Office (DMO) which helped them to restructure their commercial loans of over N660 billion, extending the life span of the loans while reducing the states’ debt-servicing expenditures.
To access the new N90 billion loan facility, the Special Adviser on Political Matters to President Muhammadu Buhari, Babafemi Ojudu listed the 22 conditions on his Facebook page on Wednesday.
They 22 conditions
- Publish audited annual financial statements within 9 months of financial year end.
- Introduction and compliance with the International Public Sector Accounting Standards (IPSAS). Publish State budget online annually.
- Publish budget implementation performance report online quarterly.
- Develop standard IPSAS compliant software to be offered to States for use by State and Local Governments.
- Set realistic and achievable targets to improve independently generated revenue (from all revenue generating activities of the State in addition to tax collections) and ratio of capital to recurrent expenditure.
- Implementation of targets Implement a centralized Treasury Single Account (TSA) in each State.
- Quarterly financial reconciliation meetings between Federal and State Governments to cover VAT, PAYE remittances, refunds on Government projects, Paris Club and other accounts.
- Share the database of companies within each State with the Federal Inland Revenue Service (FIRS). The objective is to improve VAT and PAYE collection.
- Introduce a system to allow for the immediate issue of VAT / WHT certificates on payment of invoices.
- Review all revenue related laws and update of obsolete rates / tariffs. Set limits on personnel expenditure as a share of total budgeted expenditure.
- Biometric capture of all States’ Civil Servants will be carried out to eliminate payroll fraud.
- Establishment of Efficiency Unit. Federal Government online price guide to be made available for use by States.
- Introduce a system of Continuous Audit (internal audit).
- Create a fixed asset and liability register.
- Consider privatization or concession of suitable State owned enterprises to improve efficiency and management.
- Establish a Capital Development Fund to ring-fence capital receipts and adopt accounting policies to ensure that capital receipts are strictly applied to capital projects.
- Domestication of the Fiscal Responsibility Act (FRA).
- Attainment and maintenance of a credit rating by each State of the Federation.
- Federal Government to encourage States to access funds from the capital markets for bankable projects through issuance of fast- track Municipal bond guidelines to support smaller issuances and shorter tenures.
- Full compliance with the FRA and reporting obligations, including;
- No commercial bank loans to be undertaken by States;
- Routine submission of updated debt profile report to the DMO
