BudgIT, a transparency organisation, has called for a comprehensive audit of all funds disbursed by the Federal Government to states.
The organization made the call in its April edition of the State of the States Report 2017 that made available to journalists in Lagos.
It said that in all, N1.75 trillion had been disbursed to states as extra-statutory funds with little disclosure on how the funds were spent.
BudgIT disclosed that the latest amount released was the N522.74 billion refund to states for surplus deductions of external debt servicing fees between 1995 and 2002.
It said that the Federal Government needed to enforce conditions that mandated states to articulate their policies and submit to standardized performance indicators.
“We have observed that the Federal Government seems to be adopting a reductionist approach to states by basing its release of funds on a need to offset recurrent expenditure at sub-national level.
“This tradition must be discontinued and government must ensure that funds are used efficiently.
“The allocation, utilisation and spending of public funds should be transparent, coordinated and discreet.
“We urge government to encourage states to embrace transparency to make governors to be up and doing,’’ the group said.
It said that in 2015, a 20-year term salary loan of about N338 billion was disbursed to states for the purpose of helping them face fiscal strain and meet outstanding salary obligations.
The report noted that this was followed by the N575 billion restructuring programme bond, which the Federal Government negotiated through the Debt Management Office.
The bond was to allow states convert high interest bank debt into a 20-year tenured debt with interest rates set at 14.83 percent.
According to the BudgIT report, with the exception of Ogun state, 23 states are immediate beneficiaries while the actual sum disbursed was not made public.
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“Again, in July 2015, the Federal Government remitted approximately N92.18 billion to states from dividends worth $2.1 billion paid to the centre by Nigerian Liquified Natural Gas Company (NLNG).
“Barely a year after, the sum of N7.85 billion was also approved by the federal government to assist states with revenue short-falls in January 2016 from the dividend remitted by NLNG.
“In July 2016, the federal government endorsed the allocation of N3.6 billion from solid minerals savings to states as part of the routine monthly FAAC disbursements.
“A total of N117.3 billion was also disbursed to states, amount taken from excess revenue generated from Petroleum Profit Tax (PPT).
‘’The Federal Government also announced a N90 billion loan, which it will guarantee with actual disbursement conditional on states meeting 22 stringent conditions. All states have signed up to the conditions,’’ it reported.
BudgIT urged that the institutional prioritisation of wage bills, as valid as it was, must not be done to the detriment of capital expenditure.
It said that that this might send the wrong signals to governors.