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Government gives fresh conditions for release of Paris Club funds

By Saxone Akhaine (Kaduna), Mathias Okwe, Collins Olayinka (Abuja) and Toyin Olasinde (Lagos)   |   21 March 2017   |   4:35 am

Nigeria;s finance minister Kemi Adeosun and the Vice president Yemi Osinbajo at the 2nd Presidential Quarterly Business Forum in Abuja, recently.

• TUC urges use of money for specific projects
• Suspend disbursement to govs, Umar tells president

The Federal Ministry of Finance yesterday listed fresh conditions for the release of the Paris Club debt refund to states. It said that it was doubtful if most governors fulfilled earlier conditions as salaries and pensions were still being owed in many states.

If these fresh conditions are strictly adhered to, there will be more transparent use of the funds as regards the improvement of the wellbeing of the citizens. Henceforth, there will no longer be disbursement except the ongoing reconciliation between the Federal Government and the states on the balances of their accounts of the refund arising from the first tranche disbursements is concluded. Some states are assumed to have been overpaid in the last disbursement.

The Finance Minister. Mrs. Kemi Adeosun, who gave the conditions, also said the governors must dutifully account for the application of the first tranche receipts which were anchored on certain conditions, including defraying workers’ backlog of salaries and pension commitments.


In a statement by her Media Assistant, Mr. Festus Akanbi, yesterday in Abuja, Adeosun said an independent assessment of the compliance by the states was a key function of the ministry. “It is standard practice in the Ministry of Finance to undertake an independent monitoring of compliance with the terms and conditions of funds released. This will be conducted in due course,” she said.

According to the minister, it is necessary to address the issue of Paris Club refunds to assure the public that the Federal Government has consistently complied with all extant rules and regulations in the disbursement of the money to state governments.

Adeosun said the disbursement process was transparent and targeted at the attainment of specific economic objectives. The inability of some sub-national governments to pay salaries and other obligations, according to her, is contrary to government’s economic stimulus programme.

The minister, who averred that claims of over-deductions had been consistently made to the Federal Government since 2005, maintained that the Debt Management Office (DMO) initially requested 22 months to complete the reconciliation and facilitate disbursement to states. But considering the plight of salary earners and pensioners and the need to stimulate the economy, President Muhammadu Buhari directed that the exercise be completed within 12 months.

“In addition, Mr. President gave an express anticipatory approval for the release of up to 50% of the claims of each state, pending final reconciliation. That reconciliation is undertaken by the DMO, Office of the Accountant General of the Federation (OAGF) and the relevant state governments. Accordingly, the disbursements are staggered in batches and payments are only made when the claims of each state have been reconciled with the facts at the disposal of the Federal Government.

“Specifically, information was available that some states had been paid either in full or in part, under previous administrations. This necessitated a more detailed review, for the states in question.

“The release of the first tranche, representing up to 25% of claims, being N522.7 billion commenced in December 2016. Disbursement was subject to an agreement by state governments that 50% of any amount received would be earmarked for the payment of salaries and pensions.

“In addition, each governor gave an undertaking that excess payments would be recovered from the Federal Accounts Allocation Committee (FAAC), if the final reconciliation found that the amount paid under the anticipatory approval exceeded that due.

“To date, nine batches have been processed while some balances remain outstanding to credit of some states. From the foregoing, complete and final figures can only be released and published after each state and the Federal Government have reconciled and agreed on the sums due to them,” Adeosun explained.


She recalled that at the National Economic Council (NEC) meeting on Thursday March 16, 2017, President Buhari instructed the Finance Ministry and Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele to commence the process of resolving the balance of the approved amount, insisting that the overriding consideration for any further releases would be the current and projected cash flows of the federation as well as the outcome of the independent monitoring of the compliance with terms and conditions attached to the previous releases.

Meanwhile, the Trade Union Congress (TUC) has urged the Federal Government to utilise the N500 billion London-Paris Club refund to execute tangible projects in the country.
The congress said yesterday that a careful design of specific projects would prevent governors from squandering the N388 billion, which was released in December last year but which allegedly did not have any meaningful impact on the lives of Nigerians.

President of the Congress, Bobboi Kaigama, noted that some forces might be out to frustrate the efforts of President Buhari, hence the need for the government to plan well ahead.

The TUC lamented that despite the release of money meant for the payment of salaries, most workers had not been able to feed their families, pay their rents and their wards’ school fees, let alone provide clothing.

The Secretary General of TUC, Comrade Musa Lawal Ozidi, yesterday said the union was afraid that the governors might come cap-in-hand for another round in no distant time if the necessary things were not put in place.

Besides, former Governor of Kaduna State and pro-democracy activist, Col. Abubakar Umar (rtd) yesterday urged President Buhari to stop the disbursement of the funds to the states, alleging that some governors contracted the services of consultants to secure the refund from the Federal Government.

In a statement, Umar explained that the consultants were paid fees of between 10 and 30 per cent, yet some of the governors could not use the money to pay workers’ salaries.
He also called on the president to suspend his order to the Ministry of Finance and the CBN for the release of the second tranche of the fund to governors.




  • real

    Only in Nigeria. This is a very simple thing to do. we are in time of crisis, so the federal government can use this to affect some kind of changes. There is no reason the federal government can’t request from the states, the complete list of all salaries and pension owed, then the federal government would just pay those workers directly and use any balance to pay future salaries until we are out of this recession. why do we continue to allow state to owe workers months and months and even years of salary. salary payment to workers who would spend it immediately, is one of the best stimulus for an economy in recession. It is even better than infrastructure projects. These worker don’t save or can’t afford to save, so that money is going straight into the economy.

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