BY EDMOND ODOK, ABUJA – It will soon be all smiles again for the 36 States as the Federal Government gets set to disburse about N649.4 billion as their outstanding balance from the Paris Club debts refunds.
This is even as the government has saved over N603 billion through its initiative on Continuous Audit to eliminate ghost workers from the Federal Civil Service since 2016 till date.
Minister of Finance, Mrs Zainab Ahmed, who gave the figures during her Ministry’s quarterly media briefing in Abuja on Thursday, said the Paris Club funds have been fully verified and States would soon have the refunds hitting their respective accounts.
However, Mrs Ahmed has warned it is not yet hurray for debtor-states as they must settle their undischarged commitment before enjoying the final tranche of the refund.
According to her, “For the final phase of the Paris Club debt refunds, the total sum of N649.434 billion was verified by the Ministry as the outstanding balance to be refunded to the state governments.”
Mrs Ahmed said the payments made by the Central Bank of Nigeria (CBN) as at March 2019 stood at N691.560 billion, explaining that; “The increase in CBN payments partly arose from the exchange rate differential at the point of payment. Although some states still have outstanding balances, which will be refunded, in due course.”
Though the breakdown of amount accruing to each of the 36 states was not given, the Minister said; “some states still have outstanding balances, which will be refunded, in due course.”
On the outcome of government’s continuous audit initiative, the Minister hinted that the findings from the committee in the last three years have led to the conviction of some ghost workers with others currently undergoing trials at various courts.
She further stated that; “The Presidential Initiative on Continuous Audit (PICA) has saved the Federation N603.78billion from its inception in 2016 to date. Among this figure, is the savings of N8.30 billion during Q1 2019.
“As part of this administration’s zero tolerance on corruption, PICA’s findings on ghost workers has been acted on by convicting some civil servants and also there are some that are undergoing trial on the court while others are undergoing investigation by the EFCC.”
Mrs Ahmed, who also disclosed that the three-tiers of government shared N4.8 trillion from the Federation Account as distributable revenue between September 2018 and April 2019, said; about N784.7 billion realised from Value Added Tax (VAT) during the same period was also shared by the beneficiaries
On Nigeria’s rising debt profile, she said the debt upward movement to N23.0 trillion from N12.2 trillion ‘is by design’, stating that based on research findings, government “designed the ERGP to borrow in the first, second and third years and in the fourth year the borrowing was supposed to start reducing. That is exactly what we have done.”
According to her, the Economic Recovery and Growth Plan (ERGP) was designed to reflate the economy and “take us out of recession when we came on board and we made an assessment; it was clear that our country was going into recession.
“When we did a research on the best way to reverse the recession, it was to reflate the economy and that means putting resources in the economy so that consumption will increase.”
Stoutly defending debt figure, the Minister said government is only borrowing to finance capital projects, noting that at the time Nigeria went into recession, there were other countries that suffered the same fate and some of them are still not out of recession.
She said it is kudos to the method adopted by the President Muhammadu Buhari-led administration that the country quickly exited recession; but admitted that the consequence, of course, is the increase in debt and the Federal Ministry of Finance and all its agencies are working hard to open up avenues for enhanced government revenues.
For her, at 19.09 per cent Debt to Gross Domestic Product (GDP) ratio, Nigeria still has the lowest compared to countries like Brazil and South Africa with an average of about 56 per cent debt to GDP ratio.
“If you look at our budget, the debt service to GDP ratio is 30%, but because revenues underperformed, it went as high as 50 per cent to 55 [per cent and in some months up to 60 per cent. So, if our revenues perform optimally we are in a good place as far as revenues are concerned.
“I am sure you know that we have issued promissory notes to states that constructed roads on behalf of the Federal Government; we have issued promissory notes to marketers and we are currently preparing promissory notes for businesses.
“However, the government is addressing the issue of the high debt service burden by a combination of substitution strategies, which include refinancing our shorter term, higher cost debts to longer term, lower cost debt”, Mrs Ahmed assured
“The emphasis on increasing and diversifying non-oil revenues from taxes, import duties is already yielding results, the ministry, in close collaboration with the Debt Management Office (DMO), is working on moving from high cost short term borrowings to long term low cost borrowings.”
The forum had in attendance Head of various Agencies and Departments under the Finance Ministry’s supervision. These include: the Comptroller-General of Customs, Colonel Hameed Ali (rtd): Director-General, Debt Management Office (DMO), Patience Oniha; Managing Director, Asset Management Corporation of Nigeria (AMCON), Mr Ahmed Kuru and other top functionaries of the Finance Ministry.