Sub-nationals to pay back N49b each Programme terminated

States and the Federal Capital Territory (FCT) owe the Federal Government N1,718,705,566,436.25 as outstanding liabilities on Budget Support Facilities (BSF).

This was made known yesterday by the Minister of Finance and Coordinating Minister of the Economy Mr. Olawale Edun during the National Economic Council (NEC) meeting at Presidential Villa, Abuja.

The meeting was chaired by Vice President Kashim Shettima and attended by governors and other statutory members.

Enugu State Deputy Governor Ifeanyi Ossai, who spoke to reporters on the issue after the meeting, said Edun reported that states owe N49,105,873,326.75 each.

The Federal Government has since July discontinued the budget support loan programme.

It was discontinued partly because of the surge in revenue accruing into the Federation Account following the removal of petrol subsidy.

Edun had said that the average inflow into the federation account is around N1 trillion monthly.

Another reason for discontinuance of the BSF is the substantial outstanding liabilities accumulated by the states under the programme.

The current economic realities and the need to ensure fiscal prudence is another reason.

The Federal Government opted to allocate a portion of funds from the federation account to settle the outstanding liabilities, thereby bringing closure to the programme.

The arrangement is expected to have a significant impact on the financial operations of state governments, as they will no longer have access to the additional funding provided through the budget support loan programme.

However, the government believes that the discontinuation of the programme became necessary to address the issue of outstanding liabilities and promote sustainable fiscal management practices among state governments.

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The government has also emphasised its commitment to providing support to state governments through alternative means, such as technical assistance and capacity-building programmes.

These initiatives aim to enhance the financial management capabilities of state governments and enable them to effectively utilise their resources for development purposes.

The discontinuation of the budget support loan programme marks a turning point in Nigerias fiscal policy.

While the programme provided temporary relief to state governments, the accumulation of substantial liabilities necessitated a change in approach.

The decision to prioritise settling outstanding debts and promoting sustainable fiscal practices demonstrates a commitment to long-term financial stability for the nation.

Budget Support Facilities (BSFs) are financial assistance provided by the Federal Government to state governments to support their fiscal operations and improve their financial management.

These facilities have been implemented through various programmes over the years, with the objective of enhancing the financial capacity of state governments to deliver essential services to their citizens.

The government has provided budget support to state governments in various forms, including direct transfers of funds, conditional grants and project-specific loans.

These financial instruments are meant to address specific fiscal needs, promote improved public financial management practices, and support infrastructure development initiatives.

The current status of loan arrangements for BSFs is complex and varies depending on the specific programme and the state government involved.

Some states have fully repaid their BSF loans; others are still in the process of repaying or have renegotiated their repayment terms.

In 2020, the Central Bank of Nigeria (CBN) initiated a process to recover outstanding BSF loans from state governments.

This led to some states entering into repayment agreements with the CBN. However, some states have disputed the terms of these agreements and have sought to renegotiate them.

The government has also been exploring alternative approaches to BSFs, such as performance-based grants and technical assistance programs.

These approaches are put in place to encourage more sustainable fiscal management practices by state governments.

Ossai, who gave an update on the Excess Crude Account (ECA), stated that as of September, the excess crude account stood at $473,754.57, stabilisation, N37, 597,965,211.43) and N144,683,136,928.25 as the balance of natural resources.States, FCT owe Fed Govt N1.72tr Budget Support cash. (The Nation)