FG explains Paris Club refund to States

The Federal Ministry of Finance on Tuesday provided some clarifications on the Paris Club Refund approved for the 36 States of the Federation.

The Finance Ministry noted that the issue of Paris Club loan over-deduction had been a long standing dispute between the Federal Government and the State Governments which dated back to the period of 1995 to 2002. In response to the dispute, President Muhammadu Buhari directed that the claims of over-deduction should be formally and individually reconciled by the Debt Management Office (DMO). This reconciliation commenced in November 2016.

The Ministry stated that as an interim measure to alleviate the financial challenges of the States during the 2016 recession, the President approved that 50%. of the amounts claimed by States be paid to enable the States clear salary and pension arrears. This was released between 1^st December, 2016 and 29^th September, 2017. This refund was part of the Government’s fiscal stimulus to ensure the financial health of Sub-National Governments.

It was indicated that the DMO led the reconciliation process under the supervision of the Federal Ministry of Finance. The final approval of US$2.689 billion is subject to the following conditions:

(i)    Salary and staff related arrears must be paid as a priority;

(ii)  Commitment to the commencement of the repayment of Budget Support Loans granted in 2016, to be made by all States;

(iii)   Clearing of amounts due to the Presidential Fertiliser Initiative,

(iv) Commitment to clear matching grants from the Universal Basic Education Commission (UBEC) where some States have available funds which could be used to improve primary education and learning outcomes.

The Finance Ministry further stated that the payment of the approved amount is to be made in phased tranches to the States.