…Says Excess Crude Account stands at $2.3bn
From Juliana Taiwo-Obalonye, Abuja
In order to stimulate and revamp the economy, the Federal Government has approved the deferrals on deductions from the federation account for the month of April.
The Minister of Finance, Kemi Adeosun, disclosed this at the end of National Economic Council (NEC) meeting presided over by Vice President, Yemi Osinbajo.
She said the current status of the federation account stands at N299 billion, the lowest in the history of the country, resulting from the fall in oil price in January and February when it sold at $28 and $31 per barrel.
Adeosun said the approval, which came after discussions it with President Muhammadu Buhari and state governors, was aimed at ensuring that states are supported through this difficult period to meet salary obligations.
She reiterated the Federal Government’s commitment 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 Finance Minister who briefed alongside the Nasarawa State Governor, Tanko Al-Makura, and the Corps Marshal of Federal Road Safety Commission (FRSC), Boboyi Oyeyemi, said the states have committed to submit their financial data that would enable the Federal Government to module and predict how much support in terms of loan deferrals it can give to the states to get through this period until the economy recovers.
Adeosun emphasised that it was not a bail out but a deferral, a postponement of deductions just to allow the states to have the cash they need to meet their salary obligations.
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 in recent memory. We are looking at N299 billion 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 $31 and, 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.”
On the effect of the deferrals on the economy, she said “I think I would wish to say what is the effect of non-payment of salaries on the economy; that for us is really the issue. We have got to put money into people’s pocket so that people can start spending just to get the economy moving.
“Nobody stimulates the economy by austerity but by spending. So in some states, as you know, the state government is the highest employer of labour so if the state government is unable to pay, nothing happens.
“We have prioritised getting the states back into good financial health. Now, part of that is this commitment to fiscal sustainability and that is why we have asked the states to commit to cleansing their payrolls, commit to efficiency, maximising their Internally Generated Revenue (IGR). We have asked them to give us their financial data so that we can work together to create financial module and understand what government needs to do to support the states.”
The Minister of Finance also presented a report at the council meeting on the balance of excess crude account, which stands at $2.3 billion, on the account of the interest that has been received since the last update.
She also updated the council on the constitution of the a search committee on the board of the Nigerian Sovereign Investment Authority (NSIA) and announced the nomination of six people (four men, two women) from the six geo-political zones, who will search for board members for the Nigerian Sovereign Investment Authority board.
Governor Al-Makura of Nasarawa State said NEC reconstituted the board of the Niger Delta, Power Holding Company (NDPHC), which is to facilitate effective power 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.
“We also discussed on bail out matter where the CBN Governor gave an update about those states that have been able to access the bail out and which is put at about N689.5 billion and has been disbursed as salary bail out so far”.
Oyeyemi, said the Council also approved the Nigerian Road Safety Strategy document of 2014-2018. The document is to address the current over laps, streamline the roles and responsibilities of all participants in order to maximize the benefits of investments in road safety management activities.
It also discussed the National Road a Safety Council with the Vice President, as the Chairman with representatives of from two political zones and other critical members and this Nigeria’s response