CONTROVERSY is swirling around the recent disbursement of the Paris Club refunds to the states, just few days after the Federal Government released a breakdown of the first tranche of the refunds to the 36 States and the Federal Capital Territory, Abuja. At least three states – Bayelsa, Rivers and Ekiti – have disputed the actual amount received by them, as against what the federal government claimed to have credited to their accounts.
They also faulted the impression given by the Federal Ministry of Finance that the refunds were “gifts” to pay workers’ salaries and pensioners’ entitlements. On the contrary, Bayelsa State specifically said the refunds were state governments’ monies that were deducted without consulting the states.
This disagreement seems to have pushed to the background serious matters arising from the agreement reached in 2005 between the Nigerian government and the Paris Club of creditors on debt relief. The current controversy followed the recent release of the details of the first tranche of payments by the Federal Government.
A statement by the Director of Information, Ministry of Finance, Mr. Salisu Dambatta, explained that the payments to the states and the FCT were in “partial settlement of longstanding claims by state governments relating to overdeductions from the Federal Accounts Allocation Committee (FAAC) for external debt service arising between 1995 and 2002”. According to the schedule of reimbursement, five states with the highest amounts are: Rivers, with the lion share of N34.92bn, closely followed by Delta, with N27.6bn; Akwa Ibom, N25.98bn; Bayelsa, N24.89bn and Kano, N21.7bn.
However, Governors Nyesome Wike of Rivers and Ayo Fayose of Ekiti States, claimed that they received far less than the amount said to have been paid into their states’ accounts. Bayelsa State Deputy Governor, Rear Admiral John Jonah (retd), said during a Transparency briefing in the state capital, Yenagoa, that what the state government received from the first tranche was N14.5bn, not N24.9bn, as the Federal Government claimed in the payment schedule released by the Federal Ministry of Finance.
He revealed that the current repayments in tranches were arrived at during a meeting with the Finance Minister, Mrs. Kemi Adeosun and the Governor of the Central Bank, Godwin Emefiele. He also said that contrary to what the public was fed with, both the CBN and the Finance Ministry decided that if the full refunds are made for the payment of workers’ salaries, there would be too much money in circulation, and therefore, the refunds should be paid in four installments.
The Federal Government has not refuted these claims. Nonetheless, the complaints of the states should be investigated, especially the alleged short-payments in the first tranche. This is necessary to avoid controversy in the second tranche of the reimbursements currently undergoing verification and reconciliation.
Although President Muhammadu Buhari had long approved the second tranche repayment totalling N522.74bn, the Finance Minister said in addition to the ongoing reconciliation and verification processes, any further releases of the refunds would depend on “current and projected cashflow of the federation” as well as the outcome of the independent monitoring of the states’ compliance with the terms and conditions attached to the previous release.
While we do not think that the minister’s statement should be misconstrued as flouting the president’s directive, adherence to the terms and conditions reportedly earlier agreed on, is necessary. Even though some state governors are disputing that such conditions were agreed upon, they need to be reminded that the essence of governance is the overall interest of the people. Accountability and transparency are two essential planks that hold such trust in place.
We recall that the initial disbursement generated controversy following allegations that N19bn from the first tranche of N522.74bn was paid into two accounts of the Nigeria Governors’ Forum (NGF) as commission to a consultant. But the NGF has since denied the allegation which the anti-graft agency, the Economic and Financial Crimes Commission, is reportedly investigating.
We are aware of the argument by some people that the ideal thing to do under a federal system is to release the money and let the states be at liberty to use it as they deem necessary, based on their priority concerns.
But, such argument loses ground because, as the Finance Minister explained, the disbursement was subject to an agreement with the state governments that the amount would be used for the payment of salaries and pensions. In addition, the state governors were said to have given an undertaking that any excess payments would be recovered from the Federal Accounts Allocation Committee (FAAC).
All the grey areas in this matter should be resolved. It is an open secret that many state governors are not fiscally responsible with public funds. The inability of some of them to meet salary and other obligations to their states is not in consonance with Federal Government’s economic stimulus programme.
It makes economic sense that since the states based their requests for reimbursements on unaccounted for deductions on Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) Report on the Reconciliation of State Governments’ External Debts, Vol. I, May 2007, verification and reconciliation of the reimbursements, which are already ongoing, should be completed. This is not a matter for the State Houses of Assembly to meddle into.
The Debt Management Office (DMO) had initially requested a period of 22 months to complete the reconciliation and facilitate disbursement. However, considering the plight of salary earners and the urgent need to reflate the economy, President Buhari directed late last year that the exercise be completed within one year. That period is yet to run its full course.
Altogether, we urge the Ministry of Finance and other related agencies to undertake independent monitoring of compliance with the terms and conditions for the release of the funds. This is the right step to take to ensure transparency and accountability in the use of the funds.