Minister of Finance, Kemi Adeosun, says the Federal government will be granting states a N90 billion loan which is to be paid back within one year so as to reduce their dependency on the monthly handout from the Federation Account.
The loan will be given to them when they meet 22 stringent conditions set by the federal government.
The finance minister, Kemi Adeosun, while speaking at the Stakeholders Meeting held with Commissioners for Finance on the Fiscal Sustainability Plan (FSP),in Abuja yesterday said, “The amount of the loan is N50billion for three months to be shared across the 36 states, including FCT and then N40billion for nine months.”
“It is a loan and it is fully repayable although it has a secured tie against future dividends, revenues and any amount that government might owe the states.”
“We are not suspending the federation account; federation account will still be there, but we expect the federation account to recover and as it recovers, we will withdraw the need for this support.”
The Minister further stated that the state governments “have agreed to these conditions and the lenders have agreed to make an advance to them to help them through this period.”
“The loan is a bond and it has been guaranteed by the Federal Government and it is being issued and sourced in the normal way bonds are sourced.”
“Governors unanimously approved the plan; the commissioners endorsed the plan; they know it is going to involve a lot of work in some cases.”
“They have to clean out their ghost workers, set up efficiency units, reduce their recurrent expenditure, publish their accounts and also publish their budgets.”
“There are lots of difficult conditions but by paying the price the governors and the commissioners recognise that these reforms are necessary if they want states to be fiscally sustainable.”