The Federal Government says it will begin from September, deduction of the N614 billion bail out funds it gave to States for payment of salaries of workers in 2016.
35 States in the federation benefited from the loan except Lagos State
The News Agency of Nigeria, NAN reports that the Minister of Finance, Budget and National Planing, Mrs. Zainab Ahmed said that the deduction would begin in the Federation Accounts Allocation Committee (FAAC) provision for States in September.
The minister was speaking at a Public Consultative Forum on the draft 2020-2022 Medium Term Expenditure Framework/Fiscal Strategy Paper (FSP) in Abuja,the News Agency of Nigeria (NAN) reports.
She said that the funds would be deducted from source and remitted to the Central Bank of Nigeria (CBN), adding that the refund would not form part of the revenue for funding the budget.
“It was a loan which was advanced by the CBN and the repayment will be made to the same CBN.
“So the recovery process for us is to deduct from the FAAC allocation to the states and remit same to the CBN.
“We are going to start these remittances by the next FAAC. So there will be no requirement for us to consider the Fiscal Sustainability Plan (FSP) implementation.
“We want the states to stay on the path of fiscal sustainability, but it will not be a condition for the deduction. We will deduct direct from source and remit to the CBN,” the minister said.
NAN also recalls that the Federal Government gave out the loans to 35 states as conditional budget support provided by the CBN to help them pay salaries, gratuities and pensions.
The loans were provided by the CBN at nine percent, with a grace period of two years, while the federal ministry of finance helped in the disbursements, with documented approval by the Presidency.